Why RERA Shouldn't Have Missed Rental Law

Why RERA Shouldn't Have Missed Rental Law

Why RERA Shouldn't Have Missed Rental Law

The Real Estate (Regulation & Development) Act, 2016, was meant to strengthen the property market. One of the flaws that experts point out today is the delay in establishing the state regulatory body in various states, most of which are still carrying out their operations manually. Besides, the Real Estate (Regulation & Development) Act, 2016, ignored one of the most important aspects of housing – rental market and the law to govern it. With buying and renting being equally important in a marketplace like that of India's, the real estate law should have taken this into account.

Why are rental laws necessary? Here are a few reasons:

*Just like in buying, renting is also based on the size of the unit. The law mandates that all units should be sold in terms of its carpet area and not super area. In leasing, rent is often calculated in terms of the super built up area but it can justly be calculated on the carpet area only if there was a law in place.

*There is a lack of uniformity when it comes to leasing in India especially because various states have their own processes in place. The landlord enjoys the power of position and this often leads to the tenant being treating as an underling. This could lead to tenant eviction despite agreements. According to the Rent Control Act, eviction should only take place if the tenant defaults in his rent payment or sublets without permission or causes nuisance or if the landlord chooses to shift into the premises.

*Discrimination on the basis of caste, creed, race, sexuality, marital status, food preferences and nationality is another flaw in India's rental market. This calls for a strong rental law.

*Unlike the real estate law, which is gradually gaining ground and most homebuyers today are aware of their rights, most tenants are not aware of the state-specific tenant protection law. They choose to accept that the landlord holds the supreme power.

*Strong rental law is also a requirement because every landlord expects a 10 per cent hike in rent after a year or two. This causes problems for tenants who may feel financially burdened and unsettled looking for other options in the vicinity where the rents are comparatively lower or equivalent. This is not just detrimental to the tenant but also the landlord who cannot solely assure himself of a long-term tenant if he wants to hike the rent.  

However, there is a silver-lining too. Some measures announced recently will weed out certain ills.

*No more sham rent receipts: It is not uncommon that salaried employees often used to resort to sham rent receipts to avail tax breaks. All they needed was the PAN details of the landlord and a few receipts if the rent they were paying exceeded Rs 1 lakh. Not anymore. Now the assessing officer can also demand the proof – leave and licence agreement, and a letter to the housing co-operative society informing about the tenancy, electricity bill, water bill, etc.

Eyes on the landlord's income: If you are paying a rent of Rs 50,000 or above per month, your landlord is under the watchful eye of the authorities. To widen the scope of TDS, tenants are now supposed to withhold taxes at the rate of five per cent on rental payments and deposit it within a stipulated time period. Landlords will need to report their full rental income in their returns if they wish to claim TDS benefits.

Model Tenancy: According to the Central government, it is mandatory to register all rental agreements over 11 months and the restriction on security deposit amount to three month's rent. Those overstaying after the lease period will not be allowed to do so beyond six months. Tamil Nadu intends to put this into practice already and other states may soon follow suit.

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@@Tue Feb 06 2018 21:20:35