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Tenancy is a kind of ownership over the property. A tenant is someone who is permitted to occupy the property of another person, by signing a lease or rental agreement. The rental agreement empowers the tenant in some ways but also restricts them from taking overall legal ownership of the property. With the agreement in place, both, the tenant and the landlord know their roles, rights and responsibilities.
Important characteristics of tenancy
Suppose you gave out your property to a family friend for a couple of months. This would not be considered a tenancy. Three factors become very important to establish tenancy.
First, it should be an exclusive access granted to the person/family. Second, to ensure that it is an exclusive access with no restrictions from either the landlord or others, the tenant should be paying a rent. So, if you let out your property to a family friend without taking a rent, it would just be a warm gesture on your part. The third characteristic of a tenancy, is that it is for a fixed period of time. You may let out the property for a period of one year, two years or even three years. The period of tenancy should be mutually acceptable to both parties (the landlord and the tenant) and may even stand cancelled if any act contravenes the provisions mentioned in the rental agreement. The rental agreement establishes a legal relationship between the two parties – landlord and tenant.
Difference between tenancy and lease
The two terms, tenancy and lease, are used interchangeably. However, leases are usually longer than tenancy. Some leases are for 99 years. Tenancy is used to refer to short-term rental arrangements.
Kinds of tenancy in India
All the below mentioned tenancy agreements need to be registered. Land owners must know that if the agreement is not registered and the tenant poses a threat to society, the landlord too can be penalised for violation.
‘Statutory’ refers to that which is regulated by law. Such a tenant is protected against eviction. Evictions may only happen if the tenant has caused destruction to the property or has not been using it for a period of time such as six months and above.
Usually, the rent that statutory tenants pay, is very nominal and it may so happen that upon the death of the tenant, his/her family members can, by law, assume the status of the former tenant.
A lessee enjoys far more rights than other tenants, legally and can assign or sub-lease a property, if the contract with the landlord does not state anything on the contrary. Also, unless any violation on the part of the tenant is in contravention to the clauses mentioned in the contract, the tenant is in control of the premises, without any fear of eviction.
See also: The difference between lease and licence agreements
Unlike a lessee or a statutory tenant, a licencee, as the name suggests has no interest in the premises and continues to enjoy the benefit, till the pleasure of the owner. As per the Indian Easement Act, 1882, a licence is that, in which a person grants another or a group of people the right to do or continue to do, or live in an immovable property for a period of time. Note that the right is called a licence, when, in the absence of such right, the action would be unlawful and such right does not amount to an easement or an interest in the property. Revocation of a licence is simpler, when compared to other types of tenancies.
Rights of a landlord
As already mentioned, a rental agreement establishes the legal right of the landlord over his property. Therefore, even if the property is let out, the lessee or the tenant cannot usurp it. There are various checks and balances in place to monitor this. One must know the three important rights of a landlord, under the Rent Control Act, which are as follows:
Right to evict
Violations on the part of the tenant, can be reason for the landlord to evict him/her. However, different states in India may have different variations of this right. The law makes it necessary that a landlord should give a notice of eviction to the tenant, before approaching the court.
Right to charge a rent
The landlord can charge a rent and can increase it, periodically. The rent agreement, therefore, must state it very clearly that there will be a periodic revision of the rent.
Right to repossess the property for maintenance
In order to improve the condition of the property, renovate or maintain the premises, the landlord can temporarily repossess the property. However, changes made to the property should not be intended to bring any harm to the tenants or their comfort.
See also: All you need to know about the Draft Model Tenancy Act
Rights of a tenant
The Rent Control Act establishes the rights of tenants too. By elaborating their rights and obligations, the Act protects their position as a tenant.
Cannot be evicted unfairly
Unless the tenant has violated the clauses mentioned in the rental agreement, a landlord cannot legally evict them. While the reasons allowed for evictions may be different from state to state, it may be easier to say that landlords cannot evict tenants on their own whims and fancies.
Right to pay a fair rent
The rental value of a property is generally about 8%-10% of the property. Since there is no upper limit to how much rent can be demanded, landlords may fix it on their own, or on the basis of existing rental rates. If, at any moment, the tenant feels that the rent revision has been unreasonable, he/she has the right to approach the court.
Right to essential services
Basic amenities cannot be denied to the tenant. This includes the right to fresh water supply, electricity, etc. Unless there are reasons beyond the control of the landlord, these services cannot be withdrawn, even if the tenant has failed to pay the rent.
Is the Rent Control Act applicable to all kinds of tenancies in India?
No, there are certain exceptions. For example, the Rent Control Act does not apply to a property that is let out to private limited or public limited companies with a paid-up share capital of Rs 1 crore or above, or sub-let to public sector undertakings, banks or any corporation established under any state or central act or even when it is let out to foreign companies, international missions or international agencies.
By what percent can a landlord increase/revise the rent per year?
Rent revision may amount to 5%-10% extra per year. However, this can vary from place to place and property to property.
What is a rental agreement?
A rental agreement is signed between two parties, the lessor (landlord) and the lessee (tenant) after they agree to let out and occupy the property, based on mutually acceptable terms and conditions.