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This article has been written by Ansh Yadav.

Introduction

The governor of Uttar Pradesh had promulgated the Uttar Pradesh Regulation Of Urban Tenancy Ordinance, 2021 on January 09 2021. It came into effect on January 11 2021.Earlier tenancy disputes were addressed under the Uttar Pradesh land Regulation Act, 1972.

It’s aimed to resolve tenancy disputes without delay. The state Cabinet approved the Uttar Pradesh Regulation of Urban Premises Tenancy (second) Ordinance, 2021, on April 5, 2021, solidifying the Uttar Pradesh government’s plans to enact a tenancy law. The UP Urban Buildings (Regulation of Letting, Rent, and Eviction) Act, 1972 will be replaced by the new law.It came into effect in the state on January 11, 2021, however the bill could not be passed because the legislature was adjourned indefinitely due to unforeseen circumstances, instead an ordinance was introduced.

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At a Cabinet meeting, chaired by Chief Minister Yogi Adityanath, the decision to enact the Uttar Pradesh Regulation of Urban Premises Tenancy Ordinance, 2021 was made. The state legislature passed the tenancy ordinance on January 8, 2021, with the goal of protecting both landowners and tenants’ rights.  By explicitly defining the rights and responsibilities of the transacting parties, the law, which is expected to gain Governor Anandiben Patel’s approval soon, is likely to reduce tenant-landlord disputes, particularly in the high-intensity rental markets of Noida, Greater Noida, and Ghaziabad.

Disputes between tenants and landlords have been pending for a long period of time. It defeats the objectives of speedy resolution of disputes. This is why the UP Government came up with the new tenancy laws. It is based on the model tenancy act based on the model tenancy act prescribed by the Government of India.

The ordinance makes it mandatory to execute and notify the rent agreements to the rent authority. The ordinance’s provisions will reduce tenant disputes, and rentals in earlier cases can be reconsidered. When the ordinance is passed, it will be necessary to sign a contract in order to rent out a property. Both the property owner and the tenant’s interests will be protected.

To settle conflicts, the ordinance established a rent authority and a rent tribunal. These bodies will have 60 days to rectify any issues. Under the current law, there is no clear method for conflict resolution, and cases have been lingering in court for years.  The ordinance aims to fix the terms of conditions between a landlord and tenant.

The Act is expected to be enacted in additional states eventually this year, which will not only reduce landlord-tenant issues but also serve as a significant engine for the housing market nationwide.

What kind of property comes under this law?

The primary objective is to regularize and regulate the transaction that happens between landlords and tenants in urban areas. It regulates residential and non-residential premises

Effective and speedy resolution of tenancy disputes mechanism where 2 special bodies have been constituted- 

  • Rent Authority, which is the primary body
  • Rent Tribunal, which is the appellant body

Power of rent authority has been designated to the district collector in every district. Collector will designate an additional district collector who would act as rent authority. Within seven days of receiving an agreement; the authority would issue a unique identification number and post the tenant’s information on its website. According to reports citing the ordinance, if the lease is for less than a year, tenants’ information may not be shared with the authorities.

Power of rent tribunal has been delegated to district and session judge of each district. They may act themselves as tribunal or designate any additional judge as the rent tribunal.Any issue would have to be resolved within 60 days by the rent authority and the appellate rent tribunal. Any order made by the rent authority can be appealed in the rent tribunal.

Rent authority needs to adjudicate the dispute compulsorily within two months, failing this, the authority needs to record reasons as to why the dispute was not adjudicated within two months and then the authority needs to adjudicate it within the reasonable period.One month period has been prescribed for approaching the rent tribunal after the orders of the rent authority and they have to decide the appeal within two months.

Only after paying 50% of the award given by the rent authority, an appeal can be maintained before the tribunal. Instead of a quasi-judicial process, this is a judicial process and the provisions of the Civil Procedure Code, Limitation Act and Indian Evidence act may apply to these proceedings. This eliminates futile and frivolous litigations.

Features of the new tenancy law by the UP Government

As per the government, once this law is enforced, the agreement between the tenant and the landlord will be much more transparent, and as a result, the contract of rent will be much more fair:

  • Tenants and landlords have to notify the rent authority as and when they execute the rent agreement. If one party fails to notify, then the other party can notify the rent authority after one month so that it helps in establishing the records of agreement with the rent authority.
  • Payment of security deposits that are chargeable under the rent agreement have been regularized. Previously, a security deposit of two to six months’ rent was required by the landlord. As per the new ordinance this has been capped for two months and not more than two months. For non-residential premises it has been capped at 6 months.
  • In case tenants fail to vacate after the expiry of tenancy agreement, parties have been given the option to extend or renew the lease on new terms or if the tenant fails to renew the lease, the landlord has the right to approach the rent authority and seek eviction.
  • The law gives a safety net and boosts confidence of home buyers, who invest in real estate keeping rental income in mind.
  • Landlords used to cut down essential supplies such as electricity and water when tenants were unable to pay rent. Now it cannot be done.If the landlord does so, tenant can immediately approach the rent authority for interim directions and the authorities can order immediate restoration of such essential services.
  • In the case of residential property, the annual rent cannot increase by a margin of more than 5% and for non-residential areas the annual rent cannot increase more than 7%.
  • The law provides a shield to tenants as they will not be subject to whims and fancies of landlords other than what is prescribed under the law.
  • In case, the landlord tries to increase the rent to disproportionate levels, the tenants can approach the rent authority Under Section 10 of The Ordinance and then the rent authority will determine the new rental which is commensurate with the market rate.

Mandatory rent agreements 

The new Ordinance of 2021, which was approved by the state cabinet in a meeting led by Chief Minister, Yogi Adityanath, requires rent agreements for all types of tenancy arrangements. The provisions of the rent agreements will be applicable to the tenant’s successor, as well as the landlord, if either or both of them pass away, according to the central government’s Model Tenancy Law, 2019. The UP law also states that the provisions of the rent agreements will be applicable to the tenant’s successor, as well as the landlord, if either or both of them pass away.

Whether or not they want to extend the tenancy and renew the rent agreement is a decision that both parties will make together.

Before entering into a rental agreement, landlords and tenants must sign a written rent agreement, according to the draught law. Within two months of the start of the lease, the landlord will be required to disclose the rent agreement to the rent authority. The landlord and tenants must also notify the rent authorities of the signed rent agreement within three months.

UP Rent Authority

A rental authority is also included in the statute, with which all rent agreements must be registered in order to be legally effective. For rent agreements lasting more than a year, the authority will be required to issue a unique identification number within a week of receiving the agreement and upload the agreement’s and tenant’s details to its official portal. If the tenancy is for shorter than 12 months, this will not be the case.

Disputes must be resolved by the rental authority and the appeal tribunal within 60 days after receiving an application in this respect.

Rent increases are limited

In addition, the new rule caps annual rent increases in UP. In the case of residential property, a landlord can only raise rent by 5% a year, but in the case of commercial property, he can raise rent by up to 7%. A tenant may be evicted from the premises if he fails to pay the rent for 2 continuous months, according to the code.

The UP-government’s ordinance, unlike the central version of the model tenancy law, also regulates current tenancies’ rents.

What will happen to the agreements which started prior to this ordinance?

This ordinance has provisions for rent agreements executed before its promulgation. Whenever they are renewed, they will be subject to this ordinance.

There are provisions to regulate the enhancements of rent in case of old agreements.

As it’s a prospective ordinance, any agreement executed prior to it and its partiers do not consent and come together they will not be amenable to the jurisdiction of the rent authority.

The law has shown a positive mandate to the legislature as the disputes have to be resolved in a limited time frame under this law.

But what happens in practice remains to be seen in the coming days.

Important sections of the Act

Ordinance not to apply to certain premises- Section 3

  • Property owned by the federal, state, or union territory governments, or a government undertaking or enterprise, statutory body, or cantonment board.
  • A company, university, or organization’s property that is rented to its employees as part of a service contract.
  • Premises maintained by religious or philanthropic institutions, as determined by notification from the State Government.
  • Any public trust registered under applicable law or an Auqaf registered under the Waqf Act, 1995.
  • Any other building or group of buildings that has been specially excluded in the public interest by the State Government.

Tenancy Agreement- Section 4

After the effective date of this Ordinance, no person shall let or take on rent any premises unless the landlord and tenant jointly notify the Rent Authority of the arrangement in writing. If the tenant and landlord fail to jointly notify the Rent Authority of the tenancy agreement’s execution, each of them must separately notify the Rent Authority within one month of the agreement’s expiration date.

Period of Tenancy- Section 5

Every tenancy signed into after the effective date of this Ordinance is effective for the agreed-upon duration between the landlord and the tenant. The tenant may request that the landlord renew or extend the tenancy within the agreed-upon period, and if the landlord accepts, the tenant may engage into a new tenancy agreement with the landlord or mutually agreed terms and circumstances. If a fixed-term tenancy expires without being extended, or if the tenant fails to evacuate the premises at the conclusion of the tenancy, the tenant will be responsible for paying an increased rent to the landlord.

Rights and Obligations of successor in case of death- Section 6

In the case that the landlord or tenant dies, the terms of the tenancy agreement will be enforceable on their successors. The successor of the deceased landlord or tenant will have the same rights and obligations as agreed upon in the lease agreement for the remainder of the tenure.

When a tenant dies, his tenancy rights pass to his heirs, who are: his spouse, son or daughter, or, if there are both son and daughter, both of them; his parents; his daughter-in-law, who is the widow of his pre-deceased son; and his widowed or divorced sister.

Restriction on subletting- Section 7

Unless a supplementary agreement to the existing tenancy agreement is entered into, no tenant may:

  • Sub-let the whole or portion of the premises owned by him as a tenant; or
  • Transfer or assign his rights in the tenancy agreement or any portion thereof.

Rent Authority to determine the revised rent in case of dispute – Section 10

The rent authority may be led by the current market rent in the surrounding areas let out on rent in deciding the rate to be revised.

Security Deposit- Section 11

The security deposit to be paid in advance by the tenant shall be as agreed between the landlord and the tenant in the tenancy agreement, which shall not exceed: 

  • In the event of a residential property, 2 months’ rent is required.
  • six months’ rent in the case of non-residential premises.

After deducting any liability owed by the tenant, the Security Deposit will be refunded to the tenant on the day of taking over vacant possession of the premises from the tenant.

Deposit of rent with Rent Authority- Section 14

If the landlord refuses to accept any rent or other charges due or refuses to provide a receipt, the rent and other charges must be paid to the landlord by postal money order or other method, in the manner prescribed, for two months in a row, and if the landlord refuses to accept the rent and other charges within that time, the tenant may deposit the same with the eviction officer.

In the event that the tenant is unable to determine to whom the rent is due during the term of the tenancy agreement, the tenant may deposit the rent with the rent authority.

Repair and Maintenance of Property- Section 15

If the tenant fails or refuses to make the repairs, the landlord may make the repairs and deduct the cost of the repairs from the security deposit, which must be paid by the tenant within one month of the landlord’s notification.

How will the new UP Tenancy Act assist property owners and tenants?

The new UP Tenancy Act will benefit both the landlord and the renter. The renters will be safeguarded from arbitrary or unfair rent increases by the landlord, as well as benefiting in a variety of other ways, as the landlord’s responsibilities will be explicitly stated in the rent deed signed between them. The Tenancy Act will also benefit landlords because the tenant will not be able to do or act in any way that is not specified in writing in the rent agreement.

Conclusion

The new Tenancy Act will facilitate a practical, sound, and thriving property market similar to that seen in the United States and other industrialised countries. Although much work remains to be done to bring the Indian real estate market up to par with that of the developed world, the UP government has made a start with this Act.

References

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