Up until now, the rent control laws in Delhi have allowed for tenants to make huge profits of expensive properties in prime areas paying less than Rs 500 a month. Citizens have even appealed to the High Court to challenge the grounds on which it stands as redundant, unnecessary, and highly biased and to compensate landlords for the monetary losses and emotional/mental trauma due to tenant harassment.
In this article, we will take a comprehensive yet concise look at the basic provisions and problems associated with the infamous Delhi Rent Control Act 1958.
Background – how the Act came into place
Delhi Rent Control Act was established in 1958 and covers areas under the New Delhi Municipal Committee, Delhi Cantonment Board, and all urban areas under the purview of the Delhi Municipal Corporation.
The Delhi government deemed the Act necessary due to the arrival of economically weak migrant workers who came to live in Delhi in order to seek employment. Its purpose was to protect the rights of the tenants and to stop the landlords from evicting them unduly or forcefully and from abusing their power as property owners and charging irregular rents.
Provisions of the Act
Until the monthly rent goes above Rs 3500, the DRC applies. Any disputes and rental properties above Rs 3500 falls under the purview of the Transfer of Property Act 1882.
An amendment in 1988 allows the landlord to increase the rent by 10% every three years.
If there’s no written contract/agreement, the tenants are allowed to pay the rent by the 15th of every month and demand for a receipt.
If the landlord has done any renovation, he can increase the ‘standard’ rent but the charges cannot exceed 7⅕ % of total expenses incurred.
Tenants are allowed to sublet the property.
If the rent is paid duly by the tenant, the landlord cannot evict them.
The Act covers the control of rents and eviction, and of rates of hotels and lodging houses, and for the lease of vacant premises, units rented out for public hospitals, educational institutions, public libraries or reading rooms , and orphanages.
The tenants are liable to pay the following:
- charges, not exceeding fifteen percent. of the rent for the amenities as specified in Schedule II as agreed to between the landlord and the tenant;
- maintenance charges at the rate of ten percent of the rent;
- the property tax to the local authority.
Challenges created by the Delhi Rent Control Act
The Act is considered greatly archaic as even though it started out as a legal action to protect the rights of underprivileged tenants, it has created an opposite effect and become a means for tenants to exploit landlords.
As long as the tenants pay the rent on time, no matter how negligible, they’re protected under the law from eviction. Landlords see no benefit in repairing or structurally renovating ageing, dilapidated rental properties as they cannot fully recover the expenses from tenants and receive no noticeable increase in the rent even after three years of increasing it by 10% because the ‘standard’ amount itself is very low.
The only legal grounds on which the landlord can evict the tenants are non-payment of rent arrears within two months, subletting without prior permission, nefarious and illegal activities, not using rented premises for six months, or if the landlord wants to use the property for other bonafide purposes.
But this procedure is also tedious for landlords as they have to file a petition at the Rent Controller or in the Court and send a legal notice to the tenant which can also be contested by him. Maintenance of property becomes an expensive affair as the returns are not fair.
The proposed solution – The Model Tenancy Act 2019
Released by The Ministry of Housing and Urban Affairs in 2019 to address the current problems of rental properties in India, this Act intends to put in motion a fair and transparent system to provide impartial benefits to both tenants and landlords and to offer a quick resolution for rental disputes.
It proposes to form Rent Authority Department, Rent Court and Rent Tribunal, cap security deposit for two months, access to basic essentials, reporting every rental agreement to Rent Authority within two months, issuing a Unique Identification Number to each agreement.
Landlords will receive many benefits under the Act such as fixing or revising the rent by the tenant, if the same should be agreed by the tenant, and deduct the amount from the security deposit or can ask the tenant to pay the amount if he does carry out scheduled or agreed repairs in the premises.
When passed and implemented across the country, the Act aims to succeed in eliminating all ineffective and archaic rules like the Delhi Rent Control Act.
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