The Basics & Analysis of the Rent Control Act Of India

Rent Control Act

The Rent act ascertained not only to protect the landlord’s property but for the occupant. It should be noted that presently, each state has its rent control act.

The owner cannot evict the inhabitant without sufficient reason.

The rent control act was enacted in 1948, and the motive is to manage the rules of the tenants and their landowners. Due to the 1948 Act being exceptionally rigorous and pro-tenant, the real estate market has had complications in some areas.

Some properties have been let out that are still reimbursing the exact payment of rent since 1948, overlooking inflation and inflated property valuations.

In 1992 the Central Government attempted to bring out modifications to the Act via a proposed model without downgrading the property. Unfortunately, the sitting residents disagreed with the transitions and thus failed to take effect.

Objective of the Rent Control Act

There are different types of rules and regulations exist for different states. The main objective of the rent control act is to save the tenant from the landlord’s harassment, unfair eviction and ill-treatment.

Elements of the Rent Control Act

The Rent control Act means to provide for the settlement of the standard rent amount and grants an increment in the rent amount every year. A few salient elements are:

  • Respective laws on the rent-out of properties are imposed to help the potential occupants pinpoint a rental arrangement of acceptable standards.
  • Act made for the protection of occupants against unfair removal by their landlords.
  • The landlord’s duties and responsibilities toward the occupant are defined under the rent control act.
  • The Act also delivers the right of the resident who does not fulfil their responsibility.

Agreement of Rent

In our country, we rent our property for living or work purposes, and we have to follow the rules and regulations of the Act. During the agreement between two parties, all the terms and conditions must be in written form.

If the agreement is not written and in the proper form, it will not be considered a valid agreement. The agreement has to be in:

  • The autograph of both the landlord and the tenant must be dated and signed on the agreement.
  • Registration and stamping must always be done while having an agreement.
  • If there is no valid rental agreement, the right of both the parties, the landowner and the tenant, cannot be rendered or secured by the law.

Rights of an Occupant

The Rent Control Act was created not only to save the landlord and their property but also to save the occupant. The few rights given to the occupant are listed below:

  1. Liberty against forced eviction: Under the Act, the landowner cannot evict the occupant without any valid reason. From the state, the rules for the expulsion of tenants stood slightly different. In many states, if a landowner wants to evict the occupant, they must first approach the court and then the order from the court.
  2. Honest rent: The landowner cannot charge exceptional rent while renting their property. The rent must be appropriate to the value of the property. If the occupant feels that the amount asked to pay is high, they can approach the court to seek for amendment. Mostly the rent must be between 8 to 10 per cent value of the property.
  3. Necessary Services: The primary right of the occupant is to enjoy basic needs such as water supply, electricity, and so on. If any occupant does not pay the bills of the property, the landowner cannot have the right to remove the services.
  4. Heir of tenant: the situation arises when the tenant dies; the landlord cannot throw the heirs of a tenant from his house. They can live if they want to continue to live during the contract.
  5. Renovation: If there is any renovation or maintenance required, it has to be bear by the landlord. After the tenant has vacated the house, the landlord has to return the deposit amount within the month. And adjust the unpaid dues with the amount.
  6. Privacy of tenant: The landlord has to give prior information before entering the house. The landlord cannot bar the privacy of tenants. The tenant has the right to live peacefully in their space.

Rights of the Landowner

The property is always the point of interest in the rent agreement. There are some rights for the landholder to be authorised for:

Right to Expet

Every state has different rights to expel. The landholder can evict the occupant for personal reasons when the landholder wants to live on the property. In every case, the landholder must talk to the court to expel the occupant. They can also give legal notice from the court before they want to evict the occupant.

Charging of the Rent

To receive the rent from the occupants is the right of the owner. Every state has its own rules or bars to set for the rent charge. So the landholder can keep increasing the rent from time to time as per their norms. The rent is increased accordingly for a year, which could be around 5 to 10 per cent.

Repossession of the Property

The landholder can temporarily repossess the house for basic construction. In such cases, the occupants will not face any problems or fear of the lease of the property.

Essential Documents for the Commercial Rental Agreement

  • Government ID proof
  • A passport, if not Indian.
  • Proof of evidence of business formation.
  • Actual proof of the landholder property.
  • Proof of government approvals.
  • If ID proof of any other person, then attach power of attorney.
  • Evidence of the shareholder, if any.
  • The proof of the dealership or bonds, if any.
  • Document of any association, if attached with some.
  • Agreement printed on stamp paper for validation.
  • Two recent passport-size photographs.

Renting Commercial Property

The real estate enterprise in India meets competition from within, and rent agreements must be worked upon smartly.

Ownership of Title

Before getting into an agreement with the property owner, ensure the details. Make sure that there is no further rent associated.

Power of Attorney

If the property is under construction, you should verify the title deeds and commencement certificate.

Renting Agreement

Before entering into any agreement, it is advisable to check the appropriate renting agreement. You should know the nature of rent.

Mortgage Verification

Before agreeing, verify the income tax and mortgage papers in case of the commercial agreement.

History of a Property Agent

Take a background check of a property agent before taking services from him. Information about the agent is gathered from past agreements.

Procedure to use the Commercial Rental Agreement

All documents given to the party include the warrantor. Every party gave some time to read the agreement. And to analyse the agreement before fixing any deal.

  • This agreement would require a print of a judicial stamp paper, available in every state. The value of the stamp paper is dependent on or conditioned by something else in the state. In which it is being administered and also the period of the rent.
  • The landholder and the tenant are to sign the rental agreement only after the printed document on the stamp paper, and every party must have a copy of the document
  • If 11 months is the rental time, then there is a requirement for the rental agreement to be registered. The landholder and the occupant must go to the lawyer’s office for the target of the registration.

Non-applicability of rent control act

When the property is let-out there are certain cases where the rent control act is not applicable:

  • Possessions are let-out to Pvt limited or public limited companies with a paid-up share capital of Rs 1 crore or above.
  • Possessions let out or sub-let to public sector undertakings, banks or any enterprise established under any state or central Act.
  • Possessions let out to foreign companies, transnational missions or international agencies.

Conclusion

The occupant and the landholder shall conclude the rental agreement with the occupant clearing the conditions of the rent amount and the landholder clearing the rent condition according to the rent agreement.

It is not only the rent control act. It is a load to landholders who are dependent on the market rates because a landholder cannot lease their property below the market rates.

Before planning to have a home for rent, a person must go through the points listed.

Frequently asked questions

How to pay the rent amount?

It depends on the landholder’s choice.

Is there a possibility of the rent amount being raised during the stay?

Yes, because there is a clause for raising the rent amount yearly.

What will be the security deposit?

The property owner sets the deposit, which is for the security purpose of the property.

How does a person get the security deposit back?

When a person wants to leave the property while leaving, the person gets the deposit back.

Who will pay for the damage while staying?

The occupant has to pay the damages.

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