HISTORY

Rent controls were introduced in the early 1900s in the United States and some
other parts of the world to check uninhibited rent increases and tenant eviction
during wartime housing emergencies. After World War II, there was a sudden
increase in the demand for rentable housing from soldiers returning home. With
industrialization and corresponding urbanization, there was an increase in ruralurban migrations. To prevent rents from rising too much owing to this spurt in
demand, Rent Control Acts (RCAs), under various names were introduced in many
countries. These were called the first-generation rent controls. Those introduced
later were called the second-generation rent controls or soft rent controls, because
they provided for some leeway in rent increases and tenant landlord relationship.
The first rent control legislation in India was introduced immediately after the First
World War in Bombay in 1918. It was followed by similar legislations for Calcutta
and Rangoon in 1920. By the end of the Second World War almost all the major
cities and towns in the countries were covered by rent control measures. All these
acts, born out of the inflationary aftermath of the First World War, were conceived
as purely temporary measures to provide relief to the tenants against the demand of
exorbitant rent and indiscriminate eviction by the landlords due to scarcity of
houses in the urban areas. As other parts of the globe, the rent control laws
applicable in various states in India are different with respect to various aspects
and thus, a holistic analysis, though attempted here, is difficult.

In India rent control laws can be differentiated into three distinct phases. The pre
independence legislations form the First generation laws. The post-independence
legislation that protected tenancy rights forms the second generation laws. The
legislations implemented in the period post the circulation of the Model Rent
Control Legislation, 1992 (MRCL) marked the era of third generation laws on
the subject.

The common aspects which are covered by almost all rent control acts and
legislations are to:
1. To provide tenants with security of tenure preventing the landlord from evicting
the tenant without an order issued by the court, which could not be given except on
certain specified grounds, such as, violation of condition of tenancy, subletting,
requirement of the building by the owner for his own purpose, deterioration in the
condition of the building, delay or in payment of rent for a specified period.

2. To prevent landlords from increasing the rent above the standard rate permitted
by these laws.
FIRST GENERATION LAWS
British introduced a catena of rent control legislations which addresses as first
generation laws1. fixation of standard rent was based on the cost of construction
and market value of the property These Acts protected persons occupying a
tenement, which upon their death was transferred to the members of their family
living with them.16 Rent control has to be considered on the basis of the kind of
property. Once the force of the specific legislations ended, however, tenants started
subletting parts of the premises on labels such as paying guests, or the whole of the
premises on fabulous payments on the so called caretaker-arrangement.2
SECOND GENERAL LAWS
The rent control laws primarily had two aims (1) to prevent landlords from
increasing rents above the maximum rents permitted by the new laws; (2) to give
tenants security of tenure by preventing landlords from evicting them without an
order of the court, which could not be given except on certain specified grounds.3
The demand for housing became acute. The lessors (landlords) who normally
renewed leases resorted to action for eviction and started charging heavy rents for
fresh leases. The tenants who obtained this protection were required to be strictly
regular in payment of rent and if they defaulted, they were penalized severely in
forfeiture of tenancy and finally ejectment by decree of the court of law.
The list entailing grounds of eviction are such that have been mostly interpreted by
the courts as exclusive rather than inclusive. This has led to an imbalance in the
favour of the tenants. The continuation of these Acts over a long period without
amendment to such provisions has had various adverse consequences. Reduction in
supply of rental housing, distortions in rental housing market and negative impact
on urban finances are a few of them.4 Since the regime was brought into place,
properties have changed hands many a time.
1

For our purpose, the following are the relevant legislations: The Bombay Rents, Hotel and Lodging House Rates
(Control) Act, 1947 (Bombay Rent Act, 1947), United Provinces (Temporary) Control of Rent & Eviction Act,
1947 (U.P. Rent Act, 1947), and Ajmer and Mewar Rent Control Act, 1947
2
See Amir Ahmed v. Yusuf, 1985 (1) WLN 550 [Raj].
3
Viz. default in the payment of rent, sub-letting, making structural alterations, and the landlords genuine need to
occupy the premises and some more.
4
See Planning Commission of India, 10th Five Year Plan (2002 2007), Volume III, State Plans: Trends, Concerns
and Strategies, available at
http://www.planningcommission.gov.in/plans/planrel/fiveyr/10th/volume3/10th_vol3.pdf, (Last visited on
September 25, 2010) The Planning Commission has attributed rent control acts as one of the reasons for the

THIRD GENERATION RENT CONTROL

MODEL RENT CONTROL LEGISLATION, 1992

Under the Indian Constitution, the provision of housing is a state issue. Thus the
enactment and enforcement of these laws is the responsibility of the individual
state. It is noticed that as housing is a state subject implementing these Rent
Control Laws uniformly throughout the whole country has been a big issue as
every state has its own Legislation. Hence, the Central Government may guide the
states but the power of implementation and reforming of these laws is left to the
individual states. So to overcome this situation, the Ministry of Urban
Development had prepared a Model Rent Control Legislation on the basis of series
of consultations with State Governments and various experts in 1992.
According to the MRCL overview, in 1992, rent control laws were to become
applicable to towns which had a population above three lakhs as per 1991 Census.
MRCL provides that Standard Rent is to be determined on the basis of 10 per cent
or such percentage return as the State Government may decide on total cost
consisting of two components viz., the market price of land in the year of
commencement of construction, enhanced in the manner specified in (b) below,
and the cost of construction, plus, where applicable, the cost of renovations or
major repairs. The MRCL recommends that landlords be heavily penalized for not
occupying or for again letting out the premises within three years of getting
possession on the basis of bona fide need.
On the basis of series of consultations with State Governments and various experts,
the Ministry of Urban Development had prepared a paper suggesting the basic
features of a model rent control law.5 The policy paper was considered in the Chief
Ministers Conference, where the broad frame work of the Model Rent Control
Legislation was endorsed.
The National Housing Policy, 1992 (NHP) of the Central Government envisages
amendment of the State Rent Control Laws for bringing uniformity in their
application throughout the country. The Central Government has formulated a
suitable Model Rent Control Law incorporating the features outlined in the policy
paper.6
proliferation of the slums at Dharavi, Mumbai which had to be regularised considering the magnitude of the illegal
housing it provided.
5
Ministry of Urban Development, Annual Report 2000-2001, available at http://www.urbanindia.nic.in/quickaccess/ann_report/2000-2001/English/5.pdf, (Last visited on September 28, 2010).
6
Robert Jan Baken, Plotting, Squatting, PublicPurpose, and Politics: Land Market Development, LowIncome
Housing, and PublicIntervention in India (2003 ).

EXEMPTIONS GRANTED UNDER THE MRCL

While analysing the paradigm shift under the MRCL, impetus must be given to
exemptions made for properties over which rent control would apply have to be
considered. These exemptions create an uncontrolled rental housing market. The
MRCL as a legislation lifts the imposition of rent control in urban areas up to a
population of 3 lakh.40 According to the MRCL overview, in 1992, rent control
laws would have then become applicable to ninety-two towns which had a
population above three lakhs as per 1991 Census.41 The State Governments
may, however, cover cities with population of one lakh to three lakhs or even
less than one lakh, according to local circumstances. The U.P. Bill put a cap of
three lakhs in its provisions as per the 2001 census.42 The biggest lacuna in the
law is that there is no provision for the review of the areas on the basis of
exemptions in light of future censuses that may be conducted. Further, there is
no implied interpretation that the data sought may be changed if, for example, it
is applied in the year 2012 after the 2011 census.
Exemption to premises for a period of 15 years, whether newly constructed or
otherwise, where the premises have not been under tenancy for 7 years or more
after the last tenancy would be exempted from rent control.43 The economic
implication of this would be that the landlord could recover a larger part of his
investment in that period according to the rules of demand and supply.44 Such a
suggestion, however, does not consider the distinction between older and newer
constructions as the landlord would have to remove the property altogether from
the market for a period of seven years to earn a profit as new constructions earn.
Therefore, the property would be a dead asset with zero returns upon the
investment made.45 Thus, in a competitive market, the liquidity of rental housing
would go down.

STANDARD RENT
Appraisal must be made of provisions pertaining to the Fixation of Standard Rent
and Revision. MRCL provides that Standard Rent is to be fixed on the basis of 10
per cent or such percentage return as State Government may decide on total cost

consisting of two components viz., market value of land in the year of

commencement of construction, enhanced in the manner specified in (b) below,
and cost of construction, plus, where applicable, the cost of renovations or major
repairs. The standard rent so derived is increased by a certain specified percentage
to arrive at standard rent for a given year. This percentage may be higher for nonresidential premises. The percentage can vary from state to state. In case of Delhi,
the suggested rates of increase are 4 per cent (1950-60); 6 per cent (1960-70) and 8
per cent (1970 onwards), though the inflation rate is higher. To this standard rent,
charges relating to maintenance and amenities and taxes payable on pro-rata basis
are added to derive the total amount payable by the tenant. The new standard rent
is to be applicable to all existing tenancies, and rents of these tenancies are to be
raised gradually over a specified period according to a specified schedule.Any new
tenancy created during this period will bear the same rent as in specified in the
adjustment schedule.

EVICTION OF TENANTS
The MRCL does not bring any substantial change to the grounds for
eviction. These include: non-payment of rent for a period exceeding 3 months;
unauthorized use, misuse, non-use or unauthorized subletting of premises; failure
of tenant to deliver possession after giving notice to quit; Denial by the tenant of
title of landlord; bona fide requirement by the landlord for self-use for residential
or non-residential purposes. In case the tenant decides not to pay revised standard
rent, the landlord can move for eviction. As has been pointed out above, however,
since this list has been considered as exclusive and not inclusive, therefore the
scope of judicial scrutiny has been considerably reduced.
The MRCL provides for a summary procedure for eviction for bona fide
requirement of residential premises for special and general categories of landlords,
and for repairs where essential amenities like water supply has been withheld by
landlord or tenant.7 In response to the problems that had been considered under
S.24(2) of the U.P. Act of 1972, the MRCL recommends that landlords be heavily
penalized for not occupying or for again letting out the premises within three years
of getting possession on the ground of bona fide need. In light of this, the
See Feature D (2) Eviction, Model Rent Control Legislation, 1992, Government of India, Ministry of Urban
Development, July 1992.
7

Maharashtra Rent Control Act, 1999 has declared this action to be a cognizable
offence punishable with imprisonment or fine or both.8

See Maharashtra Rent Control Act, 1999, 18 and 53. The Rajasthan Rent Control Act, though, does not penalise
the landlord as sternly but provides for compensation to the tenant on a conjoint reading of S 10 and S 12.

DEVELOPMENMT ON NEW BILL

The Parliament is now deciding to revive its Tenancy Bill (Draft Model Tenancy
Act, 2015), which allows landlords to charge market rate from the tenants, and at
the same time allows them to increase the rent periodically by 10% at the
expiration of the rent agreement. This can be seen as a paradigm shift from the
current Rent laws that makes eviction of a tenant cumbersome and prevents the
landlord from altering of the rent amount ; both of which are the primary causes of
long drawn out court battles between the two that continue for years.

MODEL TENANCY ACT, 2015

Why is it needed?
The Draft Model Tenancy Act, 2015, is an improvement on its obsolete
predecessor, the Rent Control Act, 1948. It will make things much easier for
landlords who were short-changed by the previous law. Property owners have been
skeptical about renting out their houses as they fear that their tenants may refuse to
vacate on time.
The Rent Control Act was applicable only to tenancy of more than 12 months, it
put a cap on rent, and it made it extremely difficult to evict a tenant who did not
pay the revised rents, despite having lived on the same premises for years.
The new draft on the other hand will ensure that landlords are able to charge
market rates for their residential or commercial properties, get the rents revised
periodically, and also get their premises vacated easily without getting into longdrawn legal proceedings.
With these changes, a large number of properties lying vacant can be used to not
only generate additional income for home-owners, but also solve the housing
problem in the country.
Who benefits?
Apart from being beneficial to landlords, the Draft Model Tenancy Act works well
for the tenants as well. As per the draft, a rent ceiling will be fixed in consultation

with the State government to avoid arbitrary hikes. Besides this, landlords will not
be able to evict tenants as per their whims and fancies, as there will be a written
agreement. Also, the security deposit charged from the tenant will be capped at
three times the monthly rent, which is currently charged more or less on an ad
hoc basis.
Another plus point for tenants is that they can claim a reduction in rent if the
quality of services available to them deteriorates in any way. In short, it is a winwin situation for both landlords and tenants if they play by the rule book.
The impact?
The expected change an increased willingness on the part of property owners to
rent out their properties might not happen overnight. House-owners will first
like to test the waters. However, with a long-term view, house-owners have
everything to gain by renting out their property without having to worry about
tenants vacating on time. A lot will depend on the execution of the rules mentioned
in Act to help landlords raise rents and get trouble-making tenants evicted.
IMPORTANT CHANGES IN NEW BILL
1. Increase the rent periodically by 10% at the expiration of the rent
agreement.9
2. In case the tenancy period extends and it is not renewed, the tenancy shall
be deemed to be renewed on a month-to-month basis in the same terms and
conditions for a period of six months.10
3. compensation to the landlord, which is double of the monthly rent, if the
tenant refuses to vacate the premises after his tenancy has been terminated
by order, notice or agreement.11
4. Rent Courts and Tribunals have also been proposed to be set up under the
Act.
9

Bill for Easy house rent strikes table, The Telegraph, available ,2015.
Section 5(3), Model Tenancy Act, 2015

10

11

Section 23 of the Model Tenancy Act, 2015.

5. Rent cannot be increased in between the tenancy period, unless the amount
of increase has been set out in the Tenancy agreement expressly.12
6. Bill also does not provide any solution for the automatic right which the
tenant gets over a property of he continues to reside in it for an uninterrupted
duration of 12 years13, which is also commonly known as adverse
possession.
7. For tenants- (i) Rent ceiling to be fixed, agreement to spell out of annual
increase.
(ii) No arbitrary eviction as agreement will mention rent period.
(iii) Can claim rent reduction in case of deterioration of services.
(iv) Security deposit wont exceed three times the monthly rent.
For landlords- (i) rent ceiling fixed by states, linked to inflation.
(ii) Tenancy to cease on the death of tenant
(iii) can terminate tenancy on nonpayment of rent and illegal use of
property.

12
13

Section 9 of the Model Tenancy Act, 2015.

Article 65 of the Limitation Act provides for this period of 12 years

CONCLUSION
Rent control laws in India were initially introduced as a welfare mechanism with
the aim of allowing requisitioning of houses. It has been accepted by the Law
Commission of India in its 129th Report that the maximum number of disputes
pending before the courts is those relating to eviction. Classifying them into first,
second and third generation laws and analyzing the hurdles and challenges faced
by each. While the main lacuna posed by the first generation laws was their
provisions regarding forfeiture of tenancy and arbitrary eviction of tenants, the
second generation laws entailed graver shortcomings as the tenant was usually at
the mercy of the Controller. The third generation legislations primarily consider
exemptions that can be made for properties on which rent control would apply.
Though, they also give a much needed overhaul to the assessment and fixation of
standard rent and revision. Also, to prevent frivolous litigation, a judicial
procedure has to be established. These laws have been criticized due to their
eviction procedures and the fact that there is no incentive for landlords to maintain
the premises in absence of good returns. Major rent control laws are often found
contradictory to other laws of the land in some situations as in Transfer of Property
Act, 1882 where action of eviction of a tenant can be initiated at the expiry of the
notice of eviction but where rent control laws apply such eviction cannot proceed
unless the landlord can prove the violation of one of the grounds of eviction under
the rent act.
Instead of complete deregulation of the current rent control laws step wise
reforming of these laws is suggested to bring uniformity in their implementation
throughout the country.

Bibliography
1. http://www.hindustantimes.com/india/new-law-framed-to-do-away-withtenancy-troubles-rental-housing-all-set-to-grow/storyuwG8C50cXjOL7zgNckctpM.html
2. http://mhupa.gov.in/W_new/Draft_Model_Tenancy_Act_2015.pdf
3. http://www.telegraphindia.com/1150520/jsp/nation/story_21082.jsp#.VYfE
QhOqqko