The new Model Tenancy Act (MTA), soon to be adopted by the , is expected to boost the real estate sector particularly in the rental space but its implementation may not be a cakewalk, say experts. Karnataka will be the first state in the country to adopt the new Act recently cleared by the Centre.
The model Act looks favourable for both tenants and landlords; however, there are certain areas of concern, said Suresh Hari, chairman, Credai Bengaluru. He said, the cap on the security deposit might turn out to be problematic for landlords, if the tenant defaults on rent payment or damages the property. In these cases, a two-month security deposit may not cover the landlords expenses of repair/losses due to non-payment of the rent, he added.
Despite the Karnataka Rent Control Act – 1999 being in place, both tenants and house owners in the city violated rules often. Landlords and tenants were not having written agreements and preferred cash payment to avoid taxes. There are many who are not ready to give PAN card details. The new law will make it compulsory for both parties to enter into a written agreement; they now need to inform the rent authority within two months of signing it. This might unsettle several landlords.