Rent Control Act - Rent Fixing & Eviction Rules

Rent Control Act has been implemented by the State Governments to consolidate the law relating to the property rental and eviction of tenant - for encouraging fair return on the investment by landlords and preventing undue harassment of tenants. Rent Control Act typically applies to rental premises that are let for the purpose of residence, education, business, trade or storage. In this article, we review the rental control act in detail.

Mostly Tenant Friendly

Rent Control Acts enacted by the State Governments are mostly tenant-friendly and include various regulations that protect the tenant from rent increase and eviction. Hence, the Rent Control Act was abused by the tenants to continue to pay fixed rents, irrespective of inflation and the realty boom.

The abuse of the Rent Control Act is one of the main reasons for the widespread prevalence of leave and license agreements in India. Leave and license agreements will be for a period of 11 months, with an option to renew the agreement at the expiration of the agreement. As a rental agreement that is 11 months long is just a license for the tenant to occupy the premises for a short duration, rent control laws do not apply.

Fixing Standard Rent under Rent Control Law

Most rent control laws have provisions for a court to fix standard rent and permit an increase in rental each year. For instance, in the Maharashtra Rent Control Act, if an application for fixing the standard rent or for determining the permitted increase is made by a tenant, then the court grants to fix the same as per the Rent Control Act. Also, the court can order the tenant to deposit the rental amount with the court and, out of the money deposited in the court, make an order for payment of a reasonable sum to the landlord towards payment of the rent or increases due to the landlord.

A tenant could easily have a court intervene in the landlord-tenant relationship to fix a standard rent an acceptable increase as per the Rent Control Act. Hence, the fixation of standard rent is seen by most Landlords as being tenant-friendly.

Relief against Eviction

Rent control laws also have very strong provisions against the eviction of a tenant from a property. In Maharashtra, a tenant cannot be evicted if the tenant pays or is ready and willing to pay standard rent and permitted increases. Further, no suit for recovery of possession of the property can be initiated by the landlord against the tenant until the expiry of ninety days after notice in writing, demanding the standard rent and permitted increase. Also, a court cannot pass a decree for eviction if, within a period of ninety days from the service of the summons, the tenant pays or tenders in court the standard rent and permitted increase along with 15% simple interest.

Hence, these provisions of the Rent Control Act have been abused by tenants to stay in possession of the property - long after the request to vacate by the landlord.

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Frequently Asked Questions

Common questions about Rent Control Act.

The Rent Control Act aims to consolidate laws related to property rental and tenant eviction. It encourages fair returns for landlords while preventing undue harassment of tenants.

The Rent Control Act typically applies to rental premises let for purposes such as residence, education, business, trade, or storage.

Most Rent Control Acts enacted by state governments are considered tenant-friendly, with various regulations protecting tenants from rent increases and eviction.

The widespread prevalence of leave and license agreements in India is partly due to the abuse of the Rent Control Act by tenants, who continued to pay fixed rents despite inflation and the realty boom.

Most Rent Control Acts have provisions for a court to fix a standard rent and permit an annual rental increase. For instance, in Maharashtra, the court can fix the standard rent and order the tenant to deposit rent with the court, from which a reasonable sum is paid to the landlord.

Rent Control Acts have strong provisions against tenant eviction. For example, in Maharashtra, a tenant cannot be evicted if they pay or are willing to pay the standard rent and permitted increases.

In some cases, a landlord cannot initiate a suit for possession of the property until 90 days after a written notice demanding the standard rent and permitted increase. If the tenant pays the rent and interest within 90 days of the summons, the court cannot pass a decree for eviction.

Tenants have allegedly abused the provisions of the Rent Control Act to stay in possession of properties long after the landlord's request to vacate, by taking advantage of the strong eviction protection clauses.

Leave and license agreements are typically for 11 months, with an option to renew. As these agreements are essentially short-term licenses to occupy the premises, Rent Control Acts do not apply to them.

One of the main reasons landlords might prefer leave and license agreements is to avoid the application of tenant-friendly Rent Control Acts, which can make it difficult to increase rent or evict tenants.