Mumbai: Plan to amend Rent Act may hit 5L tenants

More than five lakh tenanted families in Mumbai are likely to be impacted if the BJP-led Maharashtra government’s plans to amend the Maharashtra Rent Control Act (1999) take shape. The amendments would exclude bigger flats and all commercial establishments occupying more than 500 square feet from the protection under the Maharashtra Rent Control Act that prohibits landlords from levying market rents. Now, all those who have taken such commercial establishments on rent and also those living as tenants in residential homes that are bigger than 862 sq ft will not be protected under the Rent Control Act.  Simply put, these people will now have to pay market rates that are demanded by his/her landlord or could be evicted.

Linking income to rent

However, to ensure that the amendment does not lead to a sudden increase in rents, the proposal has incorporated a provision where in for the first three years after the amendment has been introduced, the owner of the property can only levy 50 per cent of the market rent. From the fourth year onwards, the landlord can levy 100 per cent of rent, though the act has introduced one more caveat — the landlord cannot levy a market rent that is more than 30 per cent of the annual income of the tenant. In such cases the tenant will be liable to pay rent equal to only 30 per cent of his/her annual income.

Since decades, tenants have been protected under the Rent Control Act and pay extremely low rents that are at times only a couple of hundred rupees a month. Although the proposal, if approved, could come as a big bonanza for city landlords, who feel they receive a pittance from tenants, it is likely to lead to widespread protests and agitations.

Tenants cry hoarse

Housing activists have rubbished the government’s plans and feel that it could lead to large scale eviction of middle class families in Mumbai. According to tenants’ rights activists, the Rent Control Act matter is pending before a still-to-be-formed nine-judge bench of the Supreme Court. Landlords had approached the court in 1998 to challenge the standard rent provisions of the Maharashtra Rent Control Act. They feel that added the state government cannot push such a proposal without consulting all stakeholders.

Landlords, on the other hand, say the pittance they receive as rent is not sufficient to repair and maintain their properties. In 2011, a proposed legislation drafted by the Centre to bring paltry old rentals on par with market rates had similarly created a stir. Prepared by the Union housing ministry, the draft Model Residential Tenancy Act, 2011, wanted to replace antiquated rent control legislations that cap rents. Widespread protests led the government to drop it.

Areas to be affected

Although the policy makes a provision to ensure the rent amount does not cross 30 per cent of your income level — a first instance of linking rent to income — paying one-third of the salary, too, will not be a feasible option for most. It could also be a challenge to get the correct information on the income levels of tenants and such controls could further increase red-tape and bureaucracy.

According to experts these amendments are likely to hit tenants from Girgaon and Dadar will suffer the most. Many of these tenancies have been passed on by inheritance and belong to lower income households.

To boost development of cessed buildings, many of which are dilapidated, the policy proposes to hand over the repair and maintenance of the structures to the landlords, and not the Maharashtra Housing and Area Development Authority (MHADA).