Term Of The Day: Rent Control Act
Rent Control Act
The rent control act is intended to make rental homes affordable by prohibiting landlords from charging higher rent than the rate the government considers fair. In other words, through this act the government attempts to prevent exploitation of tenants by landlords.
PropTiger Explains Rent Control Act
Rent control act is intended to protect the interests of tenants, and applies to rental agreements of 12 months or higher. Rent control acts of state governments generally prohibit landlords from charging more than the rent ceiling fixed by the government. The rent control act also prohibits evicting tenants from the home he stays, except for reasons specified in the rent act.
Landlords, however, may evict tenants if they are guilty of any crime or misappropriation, according to the rent control act and Indian laws. Landlords may also evict tenants if the latter attempt to transfer the property in their names. The rent control act also applies to legal heirs of tenants, as long as they renew the contract and stay on in the same home.
Landlords, for instance, may evict tenants if they do not pay the rent within a certain time period, damage the building or use the premises for purposes not mentioned in the rental agreement. Landlords may also evict tenants if the latter sublet the premises without the permission of the landlord. The specific rules vary from state to state.
Swedish economist Assar Lindbeck once said that in many cases rent control appears to be the most efficient technique currently known to destroy a city — except for bombing. Economists generally agree that across the world rent controls have led to inadequate investments in rental stock because the returns from renting out homes are low. It also leads to deterioration in quality and quantity of existing rental stock, poor maintenance and low property tax revenues for local municipal corporations. India's experience with rent control act is similar. Former World Bank research scholar Alain Bertaud observes that in Mumbai many buildings under rent control collapse, leading to the death of tenants because landlords are not allowed to evict them. Though landlords can still sell the whole building, tenants have certain rights over the individual units.
The Maharashtra state government recently proposed exempting commercial units from the rent control act.
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