The Karnataka Rent Control Act 2001 – An Analysis
Under the Indian Constitution, provision of housing is a state subject. Thus, the enactment and enforcement of rent control laws is the responsibility of the individual states. The common thread running through almost all Rent Control Acts (RCAs) and legislations is that they are intended to serve two purposes, to protect the tenant from eviction from the house where he is living except for defined reasons and on defined conditions and to protect him from having to pay more than a fair/standard rent.
But most acts also confer upon the landlord the right to evict a tenant who is guilty of certain specified acts and also when the landlord requires the house for his own personal occupation. In 1992, the Central Government proposed a model rent control legislation, which was meant for and circulated to all states. The Model Act proposed modification of some of the existing provisions on inheritance of tenancy and also prescribed a rent level beyond which rent control could not apply. Changes were incorporated in the Karnataka Rent Control Act 1999, as suggested by the Model Rent Control Legislation thereby bringing into force the Karnataka Rent Control Act 2001.
All properties come under the purview of this Act except any building whose rent exceeds Rs.3500 per month in areas in the First Schedule and Rs.2000 per month in any other area. Also exempted are any premises belonging to the State, Central Government or a local authority, a Muzarai or religious or charitable institution or a Wakf. Also exempted is any building, for a period of 15 years from the date of completion of construction or “substantial renovation.”
Landlord’s Perspective
The fixation of rent as a percentage of the cost of construction is a major disincentive for those wanting to invest in rental housing as it gives a very low rate of return as compared to other assets. Landlords claim that it is a major hindrance for those wanting to invest in rental housing as it gives a very low rate of return as compared to other assets. The low rate of return also leads to rapid deterioration of existing housing stock, as landlords have no incentive to invest any funds in the upkeep of their apartments.
Calculation of Rent
According to the Karnataka Rent Control Act 2001, standard rent in relation to any premises shall be the rent calculated on the basis of 10 per cent of the aggregate of the actual cost of construction of the premises and the price of the land on the date of commencement of the construction.
A tenant shall also be liable to pay the landlord the following charges besides the standard rent:
• Charges more than 15 per cent of the rent for the amenities
• Maintenance charges at the rate of 10 per cent of the rent
• The pro rata property tax in relation to the premises
• The amount paid by the landlord towards charges for electricity or water or other charges levied by a local or other authority
• Where a landlord has, with the written approval of the tenant incurred expenditure for any improvement, addition or structural alteration in the premises, the landlord may lawfully increase the rent per year by an amount lesser than 10 per cent of such cost.
The tenant may claim a decrease in the fair rent if there is deterioration in the quality of the premises.
Permission to construct additional structures
The landlord may propose to make any improvement, in or construct any additional structure on, any building, which has been let to a tenant. If the tenant refuses to allow the landlord to make such improvement or construct such additional structure and the landlord may make an application to the Court, if it is satisfied that such work will not cause any undue hardship to the tenant, the Court may permit the landlord to do such work and may make such other order as it thinks fit in the circumstances of the case.
Rules for eviction
The various grounds on which the statute enables eviction of the tenant by the landlord are as follows
• The tenant has neither paid nor tendered the whole of the arrears of the rent and other charges legally recoverable from him within two months from the date on which a notice of demand for payment of has been served on him by the landlord
• The tenant has used the premises for a purpose other than that for which they were let, without obtaining the consent in writing of the landlord
• The premises or any part thereof are required by the landlord for carrying out any repairs which cannot be carried out without the premises being vacated.
• The tenant has, allowed some other person to occupy the whole or the part of the premises without the consent of the landlord
• The tenant has materially damaged the building or has done an act resulted in depreciating the value or utility of the building
Tenant’s perspective
Like other RCAs, the Karnataka Rent Control Act 2011 was meant to protect the interests of the tenants. However the Act hasn’t covered certain important aspects pertaining to the welfare of the tenants. Unfortunately, the law has no defined section for security deposit that the tenants pay to the landlords, making it difficult for the tenants to get back there deposit money. A defined law will make it easier for both tenants and landlords making them responsible for their actions with a law binding them.
Rights of Tenants
According to the Act, no landlord either himself or through any person purporting to act on his behalf shall without just and sufficient cause cut off or withhold any essential supply or service enjoyed by the tenant in respect of the premises let to him. If a landlord does so the tenant may make an application to the Controller complaining of such contravention. If the Controller is satisfied that the essential supply or service was cut off or withheld by the landlord with a view to compel the tenant to vacate the premises or to pay an enhanced rent, the Controller may pass an order directing the landlord to restore the amenities immediately.
Inheritance of Tenancy
Karnataka is one of the only states in the country which has provisions for inheritance of tenancy in its RCA. In the event of death of a tenant, the right of tenancy shall devolve for a period of ten years from the date of his death to his successors in the following order, namely: (a) spouse; (b) son or daughter or where there are both son and daughter both of them; (c) parents; (d) daughter-in-law, being the widow of his pre-deceased son. This rule will only apply if the successor has been living or carrying on business in the premises with the deceased tenant as a member of his family up to the date of his death and was dependent on the deceased tenant.
Duties of tenants
Along with rights come duties and tenants are expected to perform them. Every tenant is bound to keep the premises in good and tenantable repairs. The tenant shall make good all damages caused to the premises by his negligence within three months of being informed in writing to do so by the landlord falling which the landlord may apply to the Controller for permission to make good the said damages.
The tenant shall hand over possession of the premises on determination of tenancy in the same condition, except for the normal wear and tear, as it was in when it was handed over to him at the beginning of such tenancy and in a case where certain damages have been caused, not being damages caused by force major, the tenant shall make good the damages caused to the premises failing which landlord may apply to the Controller for permission to make good the said damages.
The tenant shall not, whether during the subsistence of tenancy or thereafter, demolish any improvement or alteration carried out by him in the premises or remove any material used in such improvement or alteration, other than any fixture of a removable nature, without the permission of the landlord failing which such demolition or alteration shall be deemed to be a damage caused by such tenant.
Conclusion
Rent Control Laws in India were introduced as a welfare mechanism to allow the acquisition of houses and protect tenants’ rights. Though the Karnataka Rent Control Act 2011 has received a much needed overhaul but to prevent frivolous litigation, a judicial procedure must be established.
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