Delhi Rent Control Act: All you need to know

[ecis2016.org] Here is all you need to know about the Delhi Rent Control Act, 1958, which governs the rental housing in the central areas

With an intention to safeguard migrants staying on rent in Delhi, the government of India instituted the Delhi Rent Control Act, 1958. The idea was to help the population to resettle after the partition and facilitate social acceptance of the families in the Indian society. Under the rent control act Delhi, the tenants were provided with rights against untimely eviction. This also protected the economically weaker sections, who could not afford a home or apply for loans, from homelessness. This was the one of the reasons that the Act was more skewed towards tenants.

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What is Delhi Rent Control Act?

Under the Act, the government put a ceiling on the rent, which also created disinterest among investors. It was in 1988 when the Rent Control Act, Delhi, was amended to exempt properties commanding monthly rents of Rs 3,500 per month. However, landlords do not have rights to revise the rent, so far. Moreover, they cannot evict tenants, except in extreme circumstances. The act protects the tenant rights in Delhi and provides them with some basic rights.

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Delhi Rent Control Act: Key provisions

Here are some of key guidelines and provisions for tenants and landlord under the Delhi Rent Control Act (DRCA), 1958:

• The Act allows the tenant to pay the rent by the 15th of a month, if there is no written contract mentioning a date. The tenant is also liable to demand a written receipt for the same.
• The Act does not allow the landlord to evict the tenant if the rent is paid on time. (Check out ecis2016.org’s online rent receipt format.)
• The Act focuses on ‘standard’ with reference to rent amount. This is the reason why the rental yields in central Delhi areas are very low and landlords cannot evict tenants who pay a negligible amount as rent.
• The Act also mentions that a landlord can hike the ‘standard’ rent, if the rented premises is renovated but it cannot not exceed 7.5% of the total cost incurred. This is another reason why a number of buildings in central Delhi are in a dilapidated condition, as there is no incentive for landlords to renovate it.
• The Delhi Rent Control Act also allows tenants to sub-let the premises and makes it difficult for the landlord to object to it.

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Delhi Rent Control Act 2020

After the Delhi Rent Control Act has undergone amendments and revisions. There have been demands for changes in the code from the association of homeowners and also from tenants in some cases. The first amendment came in 1988 with the Delhi Rent Control (Amendment) Act. As per section 3 (c) of the Delhi Rent Act 1995, the premises with monthly rents exceeding Rs 3,500 would not come under the previous rent act of 1958. Eviction laws were regulated through the recent amendments in the act. With the Model Tenancy Act, 2019, the Delhi Rent Act of 1958 had been amended with the formulation of Delhi Rent Control Act 2020. As per the new laws, registration and creation of a contract became crucial.

The renters will receive the first copy and the second copy would be given to the rent control authority. In case of lapse of the set period of tenancy, it would be recharged on a month-to-month basis with same terms and conditions. Under Section 22, Delhi Rent Act, 2020, a tenant will continue to be a tenant by law under these terms and will be accountable for rent payment towards the property.

Also, as per Delhi Rent Control Act 2020, a security deposit of up to two months’ rent can be demanded in case of commercial property whereas the deposit amount can be up to one month’s rent for a non-private property.

Delhi Rent Control Act: Challenges

Property owners in the areas covered by the Delhi Rent Control Act, are wary of renting out their properties, due to the lack of attractive returns from their property. The situation is the same for residential and commercial areas in central Delhi, where one in every 10 cases filed at the district court is under the Delhi Rent Control Act. Even though the Act allows the landlord to raise the rent by 10% every three years, the base amount is so low that the rental yield is negligible. For example, if the original monthly rent was Rs 10, it would reach a maximum at Rs 1,000 by 1988. According to the latest amendment, properties with rent below Rs 3,500, it would stay under the purview of the DRC Act.

The consequences of Delhi Rent Control Act are such that the quality of housing options in central Delhi has gone down, as landlords do not have any interest in maintaining the properties or improving the quality of facilities for the tenants, due to lack of returns. This has also resulted in poor supply of quality housing in these areas, which is forcing tenants to settle for unwritten arrangements.

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Petitions on Delhi Rent Control Act

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Time and again, property lawyers and landlords have filed petitions in the court for the amendment of the Act, in district courts, as well as the Delhi High Court. Around 10,000 petitions have been filed till date and around 28% of all civil cases filed are regarding rent control under the Act. In January 2019, a group of landlords approached the Delhi HC, challenging the constitutional validity of the Act. After their plea was rejected by the HC, the group is now planning to approach the Supreme Court.

Meanwhile, in June 2021, the union cabinet approved the Model Tenancy Act 2019 that will act as a model for all states and union territories. The new tenancy act will regulate the rental housing segment and may replace the archaic laws that favour tenants more than the landlords. If and when it is adopted in Delhi, this may replace the Delhi Rent Control Act, 1958. The archaic law has grounds for eviction that were highly disputed in the courts of law, which often led to protracted litigation. By limiting the grounds for eviction and termination of tenancies, the New Model Tenancy Act is expected to bring consistency towards addressing these issues at the ground level.

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Delhi Rent Control Act latest updates

In June 2021, the Union Cabinet had approved the Model Tenancy Act and asked the states to adopt it. The government will repeal the Delhi Rent Control Act, 1958 and implement the new rent act. In Delhi, the centre has to enact the law since land in the national capital is a central subject. The proposed law would not impact the old contracts between tenants and landlords.

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(With inputs from Surbhi Gupta)

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Category: Lifestyle