Rent Control Act: How it safeguards the interests of tenants and landlords
When a landlord lets out his home on rent, or when a tenant occupies a rental home, such activities fall under the ambit of the Rent Control Act. Each state has its own Rent Control Act. For example, Maharashtra has the ‘Rent Control Act 1999’, Delhi has the ‘Rent Control Act 1958’ and Chennai has the ‘Tamil Nadu Buildings (Lease and Rent Control) Act 1960. The broad idea of the Rent Control Act, is to settle disputes between the landlord (licensor) and the tenant (licensee).
Salient features of the Rent Control Act
The Rent Control Act provides tenants with security and restricts landlords in their ability to evict their tenants. It eliminates loopholes, which laid both, landlords and consumers, open to the possibility of deceit. The main features of the Rent Control Act are:
- It imposes various laws on the renting out of properties, to help potential tenants in identifying and securing good rental accommodation.
- It imposes fair, standardized rental ranges, beyond which tenants cannot be charged under most circumstances.
- It intends to protect tenants against discrimination and against unfair eviction by their landlords.
- It defines landlords’ responsibilities and obligations towards their tenants, in terms of the maintenance of the rented-out homes.
- It also clearly defines the rights of landlords, with regards to tenants who do not fulfill their obligations of paying timely rent, or misuse the property in any manner.”
Status of tenancy
A tenant can be a contractual tenant or a statutory tenant. A contractual tenant is someone who occupies the premises and is entitled to the possession of the premises during the term of the contract. While a statutory tenancy comes into existence where a contractual tenant retains possession after the contract is terminated. In your case, considering that you have exercised the option to extend your tenancy, the rental agreement stands automatically extended for another two years, thereby making you a contractual tenant.
Fixation of fair rent
As your landlord has agreed not to increase the rent during the extended tenancy, his demand for an increase in rent is unjustified. However, the landlord will be entitled to approach a Rent Control Court to fix fair rent for the building even during the term of the rental agreement. The fair rent for a residential building is a percentage (9 per cent) of the total value of the building which consists of the market value for a portion of the land, cost of construction (as per rates fixed by the Public Works Department) and value of amenities (subject to a maximum of 15 per cent of the cost of the site) but subject to depreciation, depending on the age of the building. If such fair rent is greater than the existing rent, then despite the contractual understanding, you will be required to pay the fair rent fixed by Court.
How the Rent Control Act protects the interest of tenants
The Act ensures that tenants cannot be evicted from the premises, without sufficient cause. The Act contains various protections for tenants facing eviction. Similarly, the Act mandates that no landlord can cut off or withhold any essential supply or service enjoyed by a tenant, without just or sufficient cause.
Under the Act, the landlord bears the responsibility for registering any agreement for leave and license or letting out of any premises. Where a landlord does not register an agreement with a tenant, the contentions of the tenant, with regard to the terms and conditions of the lease prevail, unless the landlord proves otherwise. The Act makes it compulsory for landlords to give a written receipt for any payment made by tenants. In the event a tenant dies, the receipt is required to be issued in the name of a family member of the tenant (as specified in the Act). A landlord’s failure to provide a written receipt is a punishable offence.
How the Rent Control Act protects the interest of landlords
Experts point out that under the Act, a landlord can recover the possession of rented premises, if they require the premises for their bona fide purposes. Similarly, the Act states that in the event a tenant has alternate accommodation available, a landlord can enforce their right and recover the rented premises.
Instances where the Rent Control Act cannot be applied
Premises that have been let or sub-let to banks, public sector undertakings or any corporation established by or under any state or central act, or foreign missions, multinational companies, international agencies, are exempted from the application of the Act. The Act also does not apply to premises let to private limited and public limited companies that have a paid up share capital of Rs one crore or more.