Model Tenancy Act builds trust among NRIs

The provisions in the Model Tenancy Act that got the Indian Union Cabinet’s approval on June 2, 2021, are a ray of hope for the Non-Resident Indians (NRIs) who are planning to buy new houses or already have some ready property in India.

The model code is applicable in all the Indian states and Union Territories by introducing new laws or amending the existing ones.

Following are the main features of the Act that the NRIs keep in their mind:

1. It caters to the needs of genuine tenants and house owners. It works as a bridge amid the trust deficit that exists between tenants and landlords. It clearly defines the obligations of both.
2. The security factor has been addressed in the Act, which encourages house owners to put up vacant houses on rent.
3. The provision of a mandatory written agreement between the landlord and tenant is a safety tool in the hands of the house owners who live in a faraway place or even away from the country. There is a provision of cap on security deposit payable by a tenant as two months’ rent for residential property and six months’ rent for commercial property.
4. The real estate players are treating the provision of mandatory legal agreement as a positive step to boost the construction sector. For an NRI investor, security of his property is essential, and this act guarantees that security.
5. The most effective provision is the timeline to resolve the rental disputes.

6. Now there is a clear demarcation of responsibilities of the tenants and landlords. So there is an element of transparency. The digital infrastructure created in the article not only ensure transparency it also makes an easy arrangement for the landlords to lodge complaints and get resolution on time.

7. The real estate operators have high hopes from the Model Tenancy Act. They hope the rental market is now becoming more organized. The trust in the system would encourage NRIs to invest in the Real Estate or rent out their existing properties, which they were keeping without rent due to the fear of them being ‘grabbed’ by unscrupulous elements.

8. An ANAROCK Research suggested that over 4.22 lakh homes are scheduled for delivery in the country by 2021. “28% of these homes are unsold as on date. Going by the burgeoning demand for ready homes, developers will continue to be mindful of adhering to delivery schedules despite the impact of the pandemic’s second wave – which is already showing signs of abating.”

9. “It means that 72% of the homes are sold out despite the fact that pandemic is adversely impacting all sectors around.”

10. The Act provides security to NRI house owners and the scope of generating income through residential assets.