While the new Act will be structured to ensure fairness to both property owners and tenants, the new Act is expected to protect property owners from undue harassment by tenants.
The new law is expected to facilitate the development of rental property in the state. Existing laws give less protection to owners, who are afraid to rent out the property as they fear harassment by tenants who do not vacate the premises.
The new Act will have a provision to set up a state-level authority to regulate the rental property market.
A source close to the development said that the state government has decided to replace the Bombay (now Gujarat) Rent, Hotel and Lodging House Rates Control Act, 1947 with a new Tenancy Act on the lines of the Model Act by the Government of India. “The state government is likely to adopt the model act during the upcoming monsoon session of the state legislature without or with minimal changes,” sources said.
The Model Tenancy Act makes it mandatory for the landlord and tenant to sign a written agreement that specifies the rent, term of tenancy and other related terms. The State Government will set up a body on the lines of RERA (Real Estate Regulation Authority) to regulate all rental property transactions.
The Model Act recommends that the security deposit be limited to two months’ rent for residential premises and six months’ rent for non-residential (commercial and industrial) premises. The new Act will have a provision for sub-letting of properties.
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