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February 13, 2025

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Rent Control Act and Rental Agreement: Rights of Tenants and Landlords

The Rent Control Act is the most regulated legislation in India. Also, it is controlled by the rent, which protects the complete rights of tenants and landlords. A formal agreement is always helpful, as are the details—the landlord and tenant by the Model Act. The maximum security deposit for residential properties is two months' rent for non-residential properties. It is also six months' rent. In India, a rental agreement, also known as a lease agreement or rent agreement, is a legally binding contract between a landlord and a tenant. It outlines the terms and conditions under which the landlord rents out possessions to the tenant. The rental agreement naturally includes details such as the terms of the landlord and tenant, property address, rent amount in addition to payment terms, duration of the lease, security deposit, keep responsibilities, utility charges, and any specific rules or restrictions. It serves in place of a reference document that helps protect the rights and obligations of both the landlord and the tenant during the tenancy period. So, in this blog, we will discuss the Rent Control Act and rental agreement: rights of tenant and Landlord.

What is the Rent Control Act?

The Rent Control Act was first passed in 1948. It assumes first priority and then is the most popular among tenancy laws in India. It spells out the rapports and conditions through which the landlords can rent a property, and tenants can avail the habitation rights. It is the most detailed among many rental laws in India. The agreement ensures that the rights of both parties are preserved. Different types of states usually have similar types of rent control acts but follow a regularity in terms of various clauses. As the 1948 Rent Act was the first of its kind, it was sure to have various lacunae. Various clauses of the act were very much in favor of tenants. The problem was that it was replaced as a major hurdle towards the development of the real estate market.

What is a Rental Agreement?

A rental agreement is a legal document that serves as a contract between the landlord and the tenant. It outlines the terms and conditions of the tenancy, including the rent amount, security deposit, term of the agreement, maintenance in addition to repairs, termination and renewal, and other important clauses.

In simpler terms, a rental agreement is like a rulebook for the tenancy, confirming that both the landlord and the tenant are on the same page. And, it’s not just a piece of paper – a rental agreement is a crucial document that protects both parties' civil rights and helps avoid any future disputes or mix-ups.

Key Features of the Rent Control Act and Rental Agreement

The legislature enacted a central Rent Control Act in 1948. It wheels the guidelines for renting out goods and makes sure that neither the rights of the landlords nor the tenants are violated. While most state-level rent control entertainments are similar to one another, there are some little variations.

In certain places, the 1948 Act's excessive strictness and pro-tenant necessities have made it impossible for the real estate market to expand. Even after accounting for inflation and rising property values, the rent on convinced rented houses has remained constant since 1948.

The Central Government attempted to alter the Act in 1992 using a recommended model to prevent the property from being lessened. Sadly, the sitting tenants rejected the variations, which is why they didn't go into effect.

What is Rent?

Rent is a periodic payment made by a renter to a landlord in exchange for the use and occupation of a property. It is classically agreed upon in a lease or rental agreement and can then vary based on location, size, amenities, and market demand. According to Section 194-I of the Income-tax Act, 1961, the word "rent" is defined as "any payment, by whatever name called, beneath any lease, sub-lease, tenancy or any other treaty or arrangement for the use of any land or any building (with factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such construction is owned by the payee."

Rights of a Tenant

The purpose of the Rent Control Act is to guard tenants as well as landlords and their assets. Some significant rights settled to the tenants under the Act are as follows:

1. Right against Unfair Eviction: The Act prohibits the property owner from evicting a tenant without a valid reason. States have fairly differing laws regarding evictions. In many places, a landlord needs to go to court and get an order before they may eradicate a tenant. If the renter is open to accepting rent alterations, they may be unable to have their lease terminated in some states.

2. Fair Rent: When renting out a home, the landlord is not permissible to demand exorbitant sums of rent. A property's worth should be taken into deliberation when valuing it for rental purposes. Tenants may file a demand for relief with the court if they believe that the rent being demanded is extreme for the property's worth.

3. Essential Services: Tenants have a central right to use utilities like power and water supplies. Even in cases when the tenant has abandoned to pay rent on the same or separate property, the landlord is not entitled to fire these services.

Rights of a Landlord

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In a rental agreement, the property is continually the point of interest, and it must be protected against undue exploitation. The following civil rights are granted to the landlord under the Rent Control Act and Rental Agreement:

1. Right to Evict: This right varies from public to state. This means that in approximately all areas, a landlord has the right to eradicate a tenant for legitimate personal reasons, such as wishing to move in themselves. In Karnataka, a justification like this cannot be used to justify eviction. Most of the time, to evict a renter, the landlord needs to go to court. Additionally, the landlord is required by law to give the renter enough notice before going to court.

2. Charge Rent: The landlord has the specialist to impose rent on the renter because they are the property's owners. Since no statute precisely sets a maximum amount for rent, the landlord is free to raise rent amounts as much as he pleases. Thus, it would be wise to include the amount and relations of the increase in the rental arrangement itself in such circumstances.

3. Temporary Repossession of Property: To make improvements, alter the belongings, or make other modifications, the landlord may provisionally reclaim the property. However, the tenant must not suffer any loss as a result of these property modifications or have his tenancy knowingly affected.

How Much Can Rent Increase Under The Rent Control Act?

Owners of commercial and residential properties have the right to increase the rent. In the case of commercial properties, the rent is increased annually by 5-8%, whereas in the case of residential properties, the landlord can raise the rent by 10% after the lease expiry. While raising the amount of rent, the landlord should offer a prior written notice regarding the increase of rent, underneath Section 106 of the Transfer of Property Act, 1882.

Where is the Rent Control Act not applicable?

1. The Rent Control Act may not be applicable to the property let-out:

2. To foreign companies, worldwide agencies, or international missions.

3. To banks, corporations, or public sector actions that come under central or state acts.

4. To private limited or public limited companies.

Conclusion

Being a landlord in India entails various legal tasks and obligations. One crucial aspect that landlords must navigate is the complex countryside of rent control and eviction laws. These laws aim to strike a balance between protecting tenants' rights and ensuring fair treatment for landowners.

FAQs

1. What are the tenant rights after 10 years?

There is nothing in the law that positions any tenant to claim rights on the property after 10 years. If you have signed a treaty of 11 months with the tenants, the tenant cannot be entitled to any rights to the property as per the law.

2. Can we break an 11-month rent agreement?

The 11-month rent agreement rules must contain a termination clause outlining the situations under which the lease can be terminated by either party. This clause should cover notice periods, which are regularly one to three months, and any penalties for early termination.

3. Can a landlord force a tenant to leave?

According to the laws, the landholder cannot evict the tenant for five years if all the payment is paid on time. However, the landlord can ask for expulsion if he needs the property for personal use. The ground for expulsion should be valid in the eyes of the law.

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