The Model Tenancy Act could provide a boost to rental housing with new projects facilitating additional demand for vertical transportation.
by Yash Pandya
One sector gets a boost when almost any of the real estate segments do well — vertical transportation. Even the niche affordable housing category (where previously projects were developed horizontally to avoid expenditure on this element) is now witnessing high-rise projects, making it a key demand driver for elevators in the present scenario. The recently unveiled Model Tenancy Act is expected to have a similar impact.
Elaborating on the possible implications, Nakul Mathur, managing director, Avanta India, said:
“The model act looks favorable to both tenants and landlords, but there are some challenges that can be faced, such as the cap on the security deposit possibly turning out to be a pain point for landlords, especially in cities where multiple months' security deposit is an accepted norm. Another scenario is where the tenant defaults on rent payment or damages the property. Then, a two-month security deposit might not cover the expenses of repairs or losses to the landlord in case of nonpayment of rent."
Sharing insights on why introducing the Model Tenancy Act was necessary, Harinder Singh Hora, managing director, Reach Group, opined:
“We have seen that many landlords face problems while renting out their properties. At the same time, many prospective tenants face numerous hurdles when they seek a home for rent. With India becoming a real estate investment hub, we have many non-resident Indians (NRIs) buying residential properties, but they avoid renting them out in the fear that they might face problems when they ask the tenants to vacate the property. Such scenarios leave the infrastructure unutilized and unproductive. Model Tenancy Act 2019 has been announced at the right time, and we might see some good movement in the rental market after it gets implemented by all states.”
Examining the way forward and possible hurdles that could be encountered, Vikas Bhasin, managing director, Saya Group, shared:
“The government has laid down the basic policy, and now it is up to the states to implement it. Here, we have to see how things are handled because the same happened during the Real Estate (Regulation and Development) Act, 2016 (RERA) implementation. Every state has to look into various aspects related to the subject and then take a decision on the ways to implement. Also, it has to be seen that dilution should not happen so that the real purpose of coming up with [the] Model Tenancy Act 2019 is not defeated.”
So, as is the case with any legislation, implementation at a state level will indicate how successful the Model Tenancy Act will be in the future. The important thing is that a positive step has been taken, and elevator manufacturers may have more reasons to smile as new rental housing projects get underway.