The central government has released these new Model Tenancy Act (MTA) guidelines for states to adopt. If a state enacts these rules, the rental market becomes far more structured and formalized.
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I. Financial Caps and Transparency
The days of arbitrary rent hikes and holding massive deposits are over.
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Security Deposit Cap: This is a strict, non-negotiable limit:
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Residential Properties: Deposits are capped at a maximum of two months’ rent.
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Commercial Properties: Deposits are capped at six months’ rent.
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Deposit Deductions: Any deductions made from the security deposit must be justified with photo documentation for complete transparency.
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Rent Revision Cap: Rent increases are only allowed once annually. The revision is capped at 5% plus CPI (Consumer Price Index), with a total maximum cap of 10% annually.
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Notice Requirement: Landlords must give the tenant 90 days’ prior written notice before any rent increase takes effect.
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Mandatory Digital Payment: Rents over ₹5,000 monthly must be paid digitally, creating a mandatory, verifiable paper trail for tax and legal purposes.
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II. Registration and Penalty Risks
The new rules mandate formal documentation, and failure to comply carries a significant financial penalty.
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Mandatory Online Registration: All tenancy agreements, whether physical or digital, must undergo digital stamping and online registration with the state portal within 60 days of signing.
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Non-Compliance Fine: Failure to register the agreement incurs penalties starting at ₹5,000. Non-registered contracts are considered unenforceable, exposing the landlord to significant fraud risks and complicating any later tribunal filing.
III. Rights and Eviction Procedures
While inspections are regulated, the landlord benefits from a faster legal process for genuine issues.
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Property Inspection Rules: Landlords retain the right to inspect the property but under strict protocol:
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They must provide written notice at least 24 hours in advance.
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Visits must take place at a reasonable time of day.
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Unannounced, repeated, or intrusive visits can be challenged by the tenant before the Rent Tribunal.
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Expedited Eviction Benefit: The most significant benefit for landlords is the creation of fast-track Rent Tribunals.
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Grounds: Non-payment of rent for three months can trigger this fast-track process.
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Resolution: The tribunals are mandated to resolve eviction cases within 60 days, drastically reducing the courtroom delays typical of the previous system.
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