What is Model Tenancy Act for NRIs?

Model Tenancy Act
Real Estate » What is Model Tenancy Act for NRIs?

Table of Contents

The Model Tenancy Act aims to make tenancy easy and manageable by the NRIs. This Act hopes to help the landlords unlock their rental accommodations inventory, which will further rationalize the price structure in the rental property market.

Objectives of Model tenancy act 2021

On 2nd June 2021, the Union Cabinet approved the 2021 Act which governs both, residential and commercial properties/premises except the properties/premises excluded from the scope of the 2021 Act under Section 3.

The 2021 Act also governs lease agreements, provided they are executed as prescribed under the Act. The 2021 Act does not consider the existing rental arrangements, thereby excluding the huge body of pending tenancy disputes as well.

Some of the primary objectives of the 2021 Act are as under:

  1. To regulate the residential and commercial properties in the rental housing market,
  2. To lay down guidelines for:
    • tenancy,
    • rights and obligations for landlords and tenants, and
    • speedy and transparent dispute adjudication mechanism,
  3. To balance the interests of and make rent laws more equitable for landlords and tenants,
  4. To smoothen the process of renting a property,
  5. To outline the roles of various stakeholders,
  6. To enforce transparency in the process of renting a property, thereby minimizing the of litigations and reducing disputes between the parties,
  7. To create an effective regulatory mechanism in India to govern the relationship between a landlord and a tenant,
  8. To establish suitable rental housing for all income brackets, and
  9. To encourage engagement and resultant investments by private companies in the rental housing sector to address the prevailing enormous scarcity.

Latest news on model tenancy act

Earlier this month the Union Cabinet of India approved the Model Tenancy Act which will replace The Rent Control Act of 1948. This was yet another reform in the series that will help boost investment in the Indian real estate sector. The sector is the second largest employment generator, and needs the government’s attention and hand-holding for a demand boost.

The Model Tenancy Act will be a state subject and will be applicable once the states adopt its version with tribunals making the transaction and dealing with regard to rental activity much more transparent, formal, and enforceable. Indian real estate has long been of interest to the NRIs.

New model tenancy agreement

The Model Tenancy Act represents the government’s efforts to institutionalize rental housing by progressively bringing it into the legal market. The government stated in a statement that it expects to offer a boost to private engagement in rental housing as a business model for tackling the massive housing shortfall

Lease agreement rules in India

A lease agreement is a legally binding document. Hence, irrespective of its length or the number of pages it contains, it is essential to include certain mandatory details to make it agreeable to both parties.

The name of both parties with their address

Let us consider an example here. You, as a lessor, are letting out a property that is in the name of both you and your wife. Similarly, the lessees are three individuals who have come to rent it out.

When you are making an agreement, it is necessary to include both your and your spouse’s name as lessor, with your present address. Similarly, although they will be renting out the property, the lessees will have an original address. Include the names of all the three lessees with their original address.

What a lease agreement should contain, therefore, is the name and address of each adult member who will be occupying the rented accommodation/lease property. All their signatures are mandatory too, to make the document valid.

The inclusion of all their names (as well as both your names) gives equal rights to all three individuals and if one of them breaks a rule in the lease agreement, you will have the legal right to end their tenancy.

Lex Solutions

  • It is a boutique law firm based out of  Chandigarh, India with a wide range of Legal capabilities across jurisdictions. It is one of the best law firms in India to foster all your legal needs.


Q .Is the Model Tenancy Act applicable in Maharashtra?

The Model Tenancy Act was approved by the cabinet on June 2, 2021, and circulated by the ministry to all states and Union Territories on June 7, 2021. Over a year after, since the Union ministry of housing and urban affairs (MoHUA) circulated the Model Tenancy Act (MTA), Maharashtra has not implemented it.

Q. Can the landlord force the tenant to leave?

Aside from non-payment, a landlord has the right to evict a tenant for subletting a property or unit without prior consent from the landlord. If the landlord decides to repair or use the unit, the tenant must also vacate the property at a given time

Q. What is the lease agreement?

A lease is an implied or written agreement specifying the conditions under which a lessor accepts to let out a property to be used by a lessee. The agreement promises the lessee use of the property for an agreed length of time while the owner is assured consistent payment over the agreed period.

Q. What is the difference between rent and lease?

“Lease” is agreeing with the lessee (in simple terms, tenant) to use a property for a long period of time. “Rent” is entering into a contract with the tenant to use an asset only for a short period. In a lease agreement, property maintenance responsibility lies on the lessee.

Q. Which is better: lease or rent?

In leasing, you’ll have to pay a fixed amount ( it will be 40-50 times that of the rental amount). Additionally, if a particular company requires an asset throughout the year, then a lease is the best option. However, if there is no such demand, then renting is the best option.

Q. What happens if a lease is not registered?

Registration at Land Registry constitutes notice of the lease to all parties and for all purposes. If the lease is not registered, it follows that this notice is not given. The consequence of this is that a landlord may not be able to recover unpaid rent from the guarantor if the tenant fails to pay

Q. How do I get a copy of my lease?

If there is a mortgage on the property, you can ask the mortgage lender if they can give you a copy. The Land Registry will also hold a copy. A fee may be charged for providing a copy of the lease by the Land Registry.