Why the Model Tenancy Act is criticized for not addressing the crisis of housing sector?

A draft of the Model Tenancy Act 2019 was released by the Ministry of Housing and Urban Affairs. The model act which covers residential and non-residential properties aims to promote rental housing and ‘balance the interests’ of landowners and tenants.

Why the scope of the model act is limited?

Registered Agreements

• Even though it is not explicit it is apparent from the framing that it is largely aimed at the urban residential sector.
• The model act fails to take into account that a majority of tenancies in India are informal without written agreements forget about a registered one. The agreements in India are largely based on trust, word of mouth, and social kinship networks.

Rent Courts and Tribunals

• The act provides for the constitution of Rent Courts and Tribunals and provides for a time-bound process with dedicated courts for tenants and landlords.
• This is laudable as thousands of rent cases clog the lower judiciary and the process is lengthy and time-consuming.
• But the problem is that the jurisdiction of these courts is limited to the tenancy agreement submitted to the Rent Authority.
• As a result, older tenancies and informal tenancies will still not fall under its jurisdiction. Hence the twin problems of resolving older disputes and informal arrangements will continue.

Consequences in Current Scenario

The model Act could lead to one of two consequences:

• Either a majority of the rental agreements will continue to be unregistered thus nullifying the legislative intent of the Act, or
• The Act might formalise existing arrangements and lead to gentrification and, consequently result in increasing of rents, which is the opposite of what it sought to achieve.

Hence there is a need to comprehensively review the Model Tenancy Law.