We have discussed how Model Tenancy Act can be helpful to landlords and tenants in our previous articles. This Act will help in making a smooth relationship between both owners and tenants. MTA has been structured to make an inclusive rental market and formalize the rental home market. 

The Model Tenancy Act will be a state topic, and after states approve their version with tribunals, it will be applied, making rental transactions and dealings far more clear, official, and enforceable. NRIs have always been interested in Indian real estate. This group of ex-pats wishes to own a home or residential property in their home country, which they may use to settle down if they decide to return or to invest in an asset class that has given superior long-term returns. 

NRIs (Non-resident Indians) and HNIs (High Net worth Individuals) can make investments with the implementation of such acts based on precise norms. Once there is a call to action in the Model Tenancy Act it will help in the following ways. 

Ease of renting 

One of the most significant challenges for NRIs, overseas investors, and even those who live outstation, in letting out their homes on the rent was that the tenant would not depart the property at the end of the duration of the rental agreement. 

If the tenant fails to evacuate the premises after the lease time has ended, there is a penalty provision in the lease. This Act preserves the right of both tenants as well as landlords. The Act intends to eliminate the notion of a large security deposit, which will encourage rental activity. 

A secure flow of income 

Many of the residential units were purchased and left vacant due to the uncertainty that the tenant might not vacate the premises at the end of the rented agreement. 

This act takes the plunge and gives investors the confidence to rent out their homes and collect profits in the form of regular monthly rents. 

Also read, Warning for tenants: Beware of these rental scams

Institutional investment in residential units 

Model Tenancy Act intends to make the rental and leasing of real estate properties in the country more official. The clarification of lease regulations will aid institutional investment in residential real estate. Due to the sheer magnitude, size, and high rental returns of commercial buildings, HNI/NRI investment has been mostly observed in commercial assets. 

This new Act will also increase residential real estate confidence and institutional investment. Developers may now build on projects that are designed to be leased, lowering their costs significantly. 

Also read, Some useful tips on how to reduce home loan EMIs

Investor-friendly legislation will aid in the influx of foreign capital into the Indian real estate market. The initial public offering (IPO) of numerous REITs in India has already received a positive reaction. The new law has the potential to attract comparable investment in the residential real estate sector and institutionalise the Indian rental market. 

States will implement the Model Tenancy Act on the lines of RERA after receiving permission from the Union government; early adoption by states would improve investor confidence and encourage investments. 

Also, read our previous articles to know about the Model Tenancy Act in detail.

Union Cabinet approves Model Tenancy Act to create an inclusive rental housing market 

The Model Tenancy Act was adopted by the Union Cabinet on 30th of June 2021 which would assist to reform the country's rental housing regulatory structure and boost general growth. 

The Cabinet stated in a statement released following the meeting that the Act will make it easier to unlock unoccupied properties for rental housing. 

It gives a fillip as a business model in private investment to solve the massive housing crisis. 

According to Prime Minister Narendra Modi's cabinet, the Act would be circulated to all States/Union Territories for adaptation by means of drafting fresh law or suitably amending current rental norms. 

The Tenancy Act will help to institutionalise rental housing by progressively moving it into the formal market. 

The Model Tenancy Act intends to make the rental housing market in the United States more lively, sustainable, and inclusive. It will allow for the development of sufficient rental housing stock for all income categories, therefore tackling the issue of homelessness.