Category Archives: Rent Control

The issues relating to Rent Control and eviction

Meeting on 21/05/2013


The final discussion on The Kerala Buildings (Lease, Standard Rent and other facilities) Act 2013 was held at the south Conference hall of Kerala secretariat.  The Kerala Vyapari Vyavasai Ekopana Samithy and other associations representing the Tenants rights were present on the sides of the tenants and some organizations representing the building owners and builders took part in the discussions.

The meeting concluded with some positive results and government decided to bring the bill at the assemebly on 10 th of June 2013.

Link

Rent control Act Malayalam


Rent control Act Malayalam

(Click the above link for the Malayalam Act)

The new draft Rent Control Act in Malayalam is published

THE KERALA BUILDINGS (LEASE, STANDARD RENT AND OTHER FACILITIES) BILL, 2012


A
BILL
to regulate the leasing of buildings, to control the rent and protect
the rights of the lesser and the lessees of such buildings in the State of Kerala.
Preamble.- WHEREAS, it is expedient to regulate the leasing of buildings, to control the rent and to protect the rights of the lesser and the lessees of such buildings in the State of Kerala, to provide for the adjudication of disputes and matters connected therewith or incidental thereto;
BE it enacted in the Sixty-second year of the Republic of India, as follows:-
1. Short title, extent and commencement.- This Act may be called the Kerala Buildings (Lease, Standard Rent and Other Facilities) Act, 2012.
(2) It extends to the whole of the State of Kerala.
(3) It shall come into force at once.
2. Definitions.-(1) In this Act, unless the context otherwise requires,-
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(a) “Appellate Authority” means the Appellate Authority constituted under section 40; (b) “building” means any building, flat or hut or part of a building or hut, let or to be let separately for residential or non-residential purpose and includes,- (i) the gardens, grounds, wells, tanks and structures, if any, appurtenant to such building, hut, or part of such building or hut, or land, let or to be let along with such buildings, flat or hut; (ii) any furniture supplied by the lesser for use in such building, flat or hut and part of a building, flat or hut; (iii) any fittings or machinery belonging to the lesser, affixed to or installed in such building, flat or part of such building or flat and intended to be used by the lessee for or in connection with the purpose for which such building, flat or part of such building or flat is let or to be let, but does not include a room in a hotel or boarding house;
(c) “Inspector” means an officer appointed under section 35 to perform the functions of the Inspector under this Act; (d) “land” means a vacant land or land with building
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which is let or to be let for any use including the parking of vehicles or for the staking or storage facilities; (e)”Landlord”, “lesser” or “building owner” means a person who, is receiving or is entitled to receive the rent of any building, whether on his own account or on account of or on behalf of or for the benefit of any other person or as a trustee, guardian or receiver for any other person or who would so receive the rent or be entitled to receive the rent, where the building is let to a lessee; (f) “Local Self Government Institutions” means a town panchayat or a municipal council or a municipal corporation constituted under section 4 of the Kerala Municipality Act, 1994 (20 of 1994) or a Village Panchayat constituted under section 4 of the Kerala Panchayat Raj Act, 1994 (13 of 1994); (g) “prescribed” means prescribed by rules made under this Act; (h) “rent” means the amount paid as rent as agreed to by the lesser or building owner and the lessee under an agreement; (i) “Rent Control Court” means the court constituted under section 34;
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(j) “standard rent” in relation to any building means the rent fixed by the Rent Control Court under the provisions of this Act; (k) “security deposit” means any payment, fee, deposit or charge to be used for any purpose including the recovery of rent defaults, repairing charges for the damage caused by the lessee or for any other item specified in the Tenancy Agreement. (l) “Tenant “ or “lessee” means any person by whom or on whose account or on whose behalf the rent of any building is or but for a special agreement, would be payable and includes,- (i) the heir or heirs of a deceased lessee as defined in Section 4 ; and (ii) any person continuing in possession after the termination of the tenancy. (m) “Tenancy Agreement” means an agreement in writing between a lesser and a lessee for the use and the occupancy of a building for residential or non-residential purpose on agreed terms and conditions. (n)“Tenancy Agreement” means the period for which the building has been let to the lessee by the lesser;
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(o) “Tenantable repairs” means such repairs which shall keep the building in the same condition in which it was let out except for the normal wear and tear; (p) “Valuer” means an officer appointed under section 36 of the Act; 3. Registration of tenancy agreement.- (1) Notwithstanding anything contained in section 107 of the Transfer of Property Act, 1882 (Central Act 4 of 1882), no person shall, after the commencement of this Act, let or take on rent any premises except by an agreement in writing. (2) Every agreement referred to in sub-section (1) or required to be registered under sub-section (3) shall be registered under the Registration Act, 1908 (Central Act 16 of 1908), within such period as may be prescribed and for this purpose the agreement shall be deemed to be a document for which registration is compulsory under section 17 of the said Act. (3) Where, in relation to a tenancy created before the commencement of this Act,-
(a) An agreement in writing was entered into and was not registered under the Registration Act, 1908 (Central Act 16 of 1908) the landlord and the tenant shall, jointly
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present a copy thereof for registration before the registering officer under the said Act;
(b)No agreement in writing was entered into, the landlord and the tenant shall enter into an agreement in writing with regard to that tenancy and present the same for registration before the registering officer under the said Act:
4. Inheritance of tenancy.- (1) From the date of death of a lessee, the right of tenancy shall devolve upon his successors in the following order, namely:-
(a) Spouse;
(b) Children;
(c) Parents;
(d) Daughter-in-law, being the widow of his pre-deceased son:
Provided that the successor has ordinarily been living in the building with the deceased lessee as a member of his family upto the date of his death and was wholly dependent on the deceased lessee and the successor does not own or occupy a building in the same locality.
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(2) If a person, being a successor, mentioned in sub- section (1) was ordinarily living in the building with the deceased lessee but was not dependent on him on the date of his death or he or his spouse or any of his dependent children is owning or occupying a residential building in the locality, such successor shall acquire a right to continue in possession as a lessee for a limited period of one year from the date of death of the lessee and on the expiry of that period or on his death, whichever is earlier, the right of such successor to continue in possession of the building shall become extinguished: Provided that the right of any successor to continue in possession of the building becomes extinguished, such extinguishment shall not affect the right of any other successor of the same category to continue in possession of the building and if there is no other successor of the same category, the right to continue in possession of the building shall not, on such extinguishment, pass on to any other successor. (3) The right of every successor referred to in sub-section(1) to continue in possession of the building as a lessee shall be strictly personal to him and shall not, on the death of such successor, devolve upon any of his heirs.
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(4) Nothing contained in sub-section (1) or sub-section (2) shall apply to a non-residential building and the vacant possession of such building shall be delivered to the lesser within one year,-
(i) of the death of the lessee;
(ii) of the dissolution of the firm, in case the lessee is a firm; (iii) of the winding up of the company, in case the lessee is a company; (iv) of the dissolution of the corporate body other than a company, in case the lessee is such a corporate body. 5. Rent Payable.- The rent payable in relation to a building shall be,- (a) the rent agreed upon by the lesser and the lessee; or (b) the standard rent fixed by the Rent Control Court under section 8: Provided that if the tenancy extends beyond a period of three years, the rent payable shall be increased by twenty per cent in every three years.
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6. Other Charges Payable.- (1) A lessee shall in addition to the rent payable pay the following charges to the lesser, namely:- (a) charges for the amenities as agreed upon by the lesser and the lessee, subject to a maximum of fifteen per cent of the rent; (b) maintenance charges at the rate of ten per cent of the rent payable. (2) The lesser shall be, unless otherwise agreed, entitled to recover from the lessee the amount paid by him towards charges for electricity or water consumed or the charges, if any, payable by the lessee.7. Revision of rent in certain cases.- (1) Where a lesser has at any time, before the commencement of this Act, with or without the approval of the lessee or after the commencement of this Act, with the written approval of the lessee, incurred expenditure for any improvement, addition or structural alteration in the building, not being expenditure on decoration or tenantable repairs necessary or usual for such building and the cost of that improvement, addition or alteration has not been taken into account in determining the rent of the building, the lesser may increase the rent per year by an amount not exceeding thirty per cent of such rent.
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(2) Where a lesser intends to increase the rent of any building under sub-section (1), he shall give the lessee a notice of his intention to do so and such increase shall become due only in respect of the period of the tenancy after the expiry of thirty days from the date on which the notice is given. (3) Every notice under sub-section (2) shall be in writing signed by or on behalf of the lesser and given in the manner provided under section 106 of the Transfer of Property Act, 1882 (Central Act 4 of 1882). (4) Where, after the rent of a building has been fixed under the provisions of this Act or agreed upon, there has been a decrease or diminution in the accommodation or amenities provided in such building, the lessee may claim a reduction in the rent. 8. Rent Control Court to fix standard rent etc.- (1) The Rent Control Court shall, on an application made to it in this behalf, in the prescribed manner, in respect of any building,- (i) fix the standard rent for such building after holding such enquiry as it thinks fit taking into consideration all evidentiary materials produced by both the parties and also the report of the valuer.
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(ii) revise the rent as per the provisions of sections 5 and 7. (2) the report of the valuer under sub-section(1) shall contain the details of all the facts taken note of by the valuer while inspecting the building and his reasons for his conclusion regarding the reasonable amount of rent the building may fetch on the date of his visit and the report shall only be considered as piece of evidence and not a conclusive one. (3) In fixing the standard rent of any building part of which has been lawfully sub-let, the Rent Control Court may also fix the standard rent of such part so sub-let. (4) The standard rent shall in all cases be fixed for a period of twelve months: Provided that where any building is let or re-let for a period of less than twelve months, the standard rent for such tenancy shall bear the same proportion to the annual rent as the period of tenancy bears to twelve months.
(5) In fixing the standard rent of any building under this section, the Rent Control Court shall fix the standard rent thereof in its unfurnished condition and shall also determine an additional
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charge to be payable on account of any fittings or furniture supplied by the lesser. (6) The Rent Control Court may, while fixing the standard rent or the increase or decrease in rent or other charges payable, order for payment of the arrears of amount due by the lessee to the lesser or lesser to the lessee in such number of installments within a time to be fixed by the Rent Control Court. 9. Fixation of interim rent.- If an application for fixing the standard rent or for determining the increase or decrease of such rent is made under section 8, the Rent Control Court shall, as expeditiously as possible, make an order specifying the amount of the rent or the lawful increase or decrease pending final decision on the application and shall appoint the date from which the rent or lawful increase or decrease so specified shall have effect. 10. Lesser to claim or receive agreed rent, other charges, if any, and security deposit or rent fixed by the Rent Control Court.- The lesser shall not claim, receive or stipulate for the payment other than,- (i) the rent, other charges and security deposit as agreed to between the lesser and the lessee;
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(ii) the rent and other charges, if any, fixed by the Rent Control Court: Provided that the lesser may receive or stipulate for the payment of an amount not exceeding six months’ rent by way of security deposit. 11. Payment of Rent.- Every lessee shall pay rent and other charges, if any, payable within the time fixed in the agreement or in the absence of such stipulation, by the fifteenth day of the succeeding month of the month for which it is payable and where any default occurs in the payment of rent and other charges, if any, the lessee shall be liable to pay simple interest at the rate of twelve per cent per annum from the date on which such payment of rent and other charges payable became due to the date on which it is paid. 12. Receipt to be given for the rent paid.- (1) Every lessee who makes payment of rent or other charges payable or security deposit to his lesser shall be entitled to obtain forthwith a written receipt for the amount paid duly signed by the lesser or his authorised agent.
(2) Where the lesser or his authorised agent refuses or neglects to deliver to the lessee the receipt under sub-section (1),
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the Rent Control Court shall, on an application filed in this behalf by the lessee, within two months from the date of payment and after hearing the lesser or his authorised agent, pass an order directing the lesser or his authorised agent to pay to the lessee, by way of damages, such sum not exceeding double the amount of rent or other charges paid by the lessee and the costs of the application and shall also grant a certificate to the lessee in respect of the rent or other charges paid. (3) Where the lesser or his authorised agent refuses to accept or evades the receipt of rent and other charges payable to him the lessee shall, by notice in writing, require the lesser to supply him the particulars of his bank account in the locality in which the lessee shall deposit the rent and other charges payable to the lesser. (4) Where the lesser does not supply the particulars of bank account, the lessee shall remit the rent and the other charges payable to the lesser, from time to time, through money order or any other lawful mode of payment after deducting the service charges.
13. Deposit of rent by the lessee.- (1) Where the lesser does not accept the rent and other charges, if any, payable by the lessee as provided in section 11 or section 12 or refuses or neglects to
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deliver a receipt under section 12 or where there is a bonafide doubt as to the person to whom the rent is payable, the lessee shall deposit such rent and other changes, if any, payable with the Rent Control Court through an application in the prescribed manner. (2) On deposit of the rent and other charges, if any, payable, the Rent Control Court shall send, in the prescribed manner, a copy of the application to the lesser or the persons claiming to be entitled to the rent and other charges, payable with an endorsement of the date of the deposit. (3) Where an application is made for the withdrawal of any deposit of rent and other charges, if any, payable, the Rent Control Court shall, on being satisfied that the applicant is the person entitled to receive the rent and other charges deposited, order the amount of the rent and other charges to be paid to the applicant, in the prescribed manner:
Provided that no order for payment of any deposit of rent and other charges payable shall be made by the Rent Control Court under this sub-section without giving all the persons named by the lessee in his application under sub-section (1) as claiming to be entitled to payment of such rent and other charges payable, an opportunity of being heard and such order shall be without
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prejudice to the rights of such persons to receive such rent and other charges payable as decided by a court of competent jurisdiction. (4) Where any statement contained in an application filed by the lessee under sub-section (1) is contrary to the facts or incorrect, the lesser may file a petition before the Rent Control Court within thirty days from the date of receipt of the notice of deposit. (5) On receipt of the petition under sub-section (4), the Rent Control Court, after giving the lessee an opportunity of being heard and on being satisfied that the statements in the petition are materially incorrect may impose on the lessee an amount which may extend to two months’ rent as fine and may order that a sum out of the fine imposed be paid to the lesser as compensation in addition to the arrears of rent and other charges deposited.
(6) The Rent Control Court may, on a petition filed by the lessee, after giving an opportunity of being heard and on being satisfied that the lesser, without any reasonable cause, refused to accept the rent and other charges payable, though tendered to him, within the time referred to in section 11, impose on the lesser an amount which may extend to two months’ rent as fine and may
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further order that a sum out of the fine imposed be paid to the lessee as compensation. 14. Time limit for deposit of rent and consequences of incorrect particulars in the application for deposit.- (1) No rent deposited under section 13 shall be considered to have been validly deposited under the said section, unless the deposit is made within twenty-one days from the date specified under section 11 for the payment of the rent. (2) No such deposit shall be considered to have been validly made, if the lessee willfully makes any false statement in his application for depositing the rent, unless the lesser has withdrawn the amount deposited before the date of filing the application for the recovery of possession of the building from the lessee. (3) Where the rent is deposited within the time limit specified under sub-section (1) and does not cease to be valid deposit for the reason mentioned in sub-section (2), the deposit shall constitute payment of rent to the lesser, as if the amount deposited had been validly tendered.
15. Saving as to the acceptance of rent and other charges payable and forfeiture of deposit.- (1) The withdrawal of rent and other charges, if any, payable, deposited under section 13, shall not
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operate as an admission of the correctness of the rate of rent and other charges payable during the period of default, the amount due, or of any other facts stated in the lessee’s application for depositing the rent and other charges payable under the said section. (2) Where any rent and other charges payable and deposited are not withdrawn, before the expiration of five years from the date of sending the notice of deposit, by the lesser or by the person entitled to receive such rent and other charges payable shall be forfeited to Government by an order made by the Rent Control Court.(3) Before passing an order of forfeiture, the Rent Control Court shall give notice to the lesser or to the person entitled to receive the rent and other charges in deposit by registered post at the last known address of such lesser or person and shall also publish the notice in the office of the Rent Control Court and in any local newspaper. 16. Period of Tenancy.- (1) The period of tenancy in respect of a building shall be the period agreed to between the lesser and the lessee unless terminated otherwise.
(2) Notwithstanding anything contained in sub-section (1) or any other law for the time being in force, or in any judgment,
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decree or order of any Court , where the period of tenancy in respect of any existing tenancy of a building is over before the commencement of this Act and no proceedings for eviction are pending before any Court and the lessee is continuing in possession of the building, the period of tenancy in such case shall continue upto six months from the date of commencement of this Act: Provided that at any time before the said period, the lesser and the lessee may by a written agreement extend the period of tenancy. In case a written agreement is not forthcoming within six months from the date of commencement of this Act, a committee constituted with Executive Engineer, Buildings division of the concerned district of Public Works Department of the State Government as chairman and one representative each of lessee and lesser as members shall fix the rent enabling both the parties to enter into an agreement within another six months. If a valid agreement is not reached within one year from the date of commencement of this Act, the parties can refer the case to the Rent Control Court for fixing the standard rent.
(3) It shall be the duty of the lessee to hand over the physical vacant possession of the building to the lesser or his authorised
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agent immediately after the period of tenancy is over or terminated otherwise. 17. Duties of lesser.- (1) Subject to any agreement in writing to the contrary, every lesser shall be bound to keep the building in good and tenantable repairs. (2) Where any repairs, without which the building are not habitable or usable and if the lesser neglects or fails to make them within a period of three months after issuing notice in writing, the lessee shall apply to the Rent Control Court for permission to make such repairs himself and shall submit to the Rent Control Court an estimate of the cost of such repairs and thereupon, the Rent Control Court shall after giving the lesser an opportunity of being heard and after considering such estimate of the cost and making such inquiries as it may consider necessary, by an order in writing, permit the lessee to make such repairs at such cost as may be specified in the order and it shall thereafter be lawful for the lessee to make such repairs himself and to deduct the cost thereof, which shall in no case exceed the amount so specified, from the rent or otherwise recover it from the lesser :
Provided that the amount so deducted or recoverable from rent in an year shall not exceed one-half of the rent payable by
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the lessee for that year and any amount remaining not recovered in that year shall be deducted or recovered from rent in the subsequent years at the rate of not more than twenty-five percent of the rent for a month: Provided further that where there are more than one lessee in a building owned by a lesser, the lessees thereof shall jointly carry out the repairs and share the expenses proportionately. (3) Nothing in sub-section (2) shall apply to a building which,-(a) at the time of letting out was not habitable or usable except with undue inconvenience and the lessee had agreed to take the same in that condition, (b) after being let out was caused by the lessee to be not habitable or useable except with undue inconvenience. (4) It shall be the duty of every lesser of a building to send a communication by registered post with acknowledgement due to the nearest police station within whose jurisdiction the said building is situate incorporating the particulars of the building, name of the lesser, age, father’s name, date of commencement of tenancy, the period of tenancy, address and details of employment of the lessee along with a photostat copy of the identity proof of the lessee.
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(5) The communication under sub-section (4) shall be forwarded within one month from the date of commencement of the period of tenancy Explanation:- For the purpose of this section, the identity proof means any document such as Ration Card, Income Tax PAN Card, Driving License, Employment Identity Card in the case of Government Employees or any other identity issued by the Central or the State Government. (6) A register containing the details of the buildings occupied by the lessees together with other particulars mentioned in sub-section (4) shall be maintained in each police station within the jurisdiction of which such building is situate. (7) Any lesser who fails to furnish the information required under sub-section (4) shall on conviction be punished with a fine of five hundred rupees. 18. Duties of lessee.- (1) Every lessee shall be bound to keep the building in good and tenantable repairs. (2) The lessee shall allow the lesser or a person authorised by him to enter and inspect the building, in the prescribed manner.
(3) The lessee shall make good all damage caused to the building by his negligence within three months of being informed in
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writing to do so by the lesser failing which the lesser shall apply to the Rent Control Court for permission to make good the said damage and the Rent Control Court may decide the matter after giving the lessee an opportunity of being heard and after considering the estimate of the cost and making such inquiries as it may consider necessary, by an order in writing, permit the lesser to make such repairs at such cost as shall be specified in the order, and it shall thereafter be lawful for the lesser to make such repairs and to recover the cost of such repairs from the lessee, which shall in no case exceed the amount so specified. (4) The lessee shall hand over the possession of the building on termination of tenancy in the same condition, except for the normal wear and tear, when it was handed over to him at the beginning of such tenancy and in case where damage have been caused, not being the damage caused by force majeure, the lessee shall make good the damage caused to the building failing which the lesser may apply to the Rent Control Court and the Rent Control Court may decide the matter in the manner provided in sub-section (3).
(5) The lessee shall not, during the subsistence of tenancy or thereafter, demolish any improvement or alteration other than any
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fixture of a removable nature, without the permission of the lesser failing which such demolition or alteration shall be deemed to be a damage caused by such lessee under sub-section (3) and shall be dealt with in the manner provided in the said sub-section. (6) The lessee shall vacate and hand over the building to the lesser, if the lessee is already in possession of a building or subsequently acquires possession of or puts up a building, reasonably sufficient for his requirement in the same city, town or panchayat. 19. Cutting off or withholding essential supply or services.– (1) No lesser, either by himself or through any person purporting to act on his behalf, shall without just and sufficient cause cut off or withhold any essential supply or services enjoyed by the lessee in respect of the building let out to him. (2) Where a lesser contravenes the provisions of sub-section (1), the lessee may make an application, in the prescribed form, to the Rent Control Court complaining of such contravention.
(3) Where the Rent Control Court is satisfied that the essential supply or services was cut off or withheld by the lesser with a view to compel the lessee to vacate the building or to pay an enhanced rent, the Rent Control Court shall pass an interim order,
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without giving notice to the lesser, directing him to restore the amenities immediately, pending enquiry referred to in sub-section (4). (4) Where the Rent Control Court on enquiry, finds that the essential supply or services enjoyed by the lessee in respect of the building was cut off or withheld by the lesser, without just and sufficient cause, he shall make an order directing the lesser to restore such supply or service. (5) The Rent Control Court may, in its discretion, order a compensation not exceeding one thousand rupees,-
(a) to be paid to the lesser by the lessee, if the application under sub-section (2) was made frivolously or vexatiously;
(b) to be paid to the lessee by the lesser, if the lesser has cut off or withheld the supply or services without just and sufficient cause.
Explanation I.- For the purposes of this section, “essential supply or services” includes supply of water, electricity, lights in passage, lift and on staircases, conservancy and sanitary services.
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Explanation II.- For the purpose of this section, withholding any essential supply or services shall include acts or omissions, on the part of the lesser on account of which the essential supply or services are cut off by the Local Self Government Institution or any other competent authority. 20. Protection against arbitrary eviction of lessees.- (1) Notwithstanding anything contained in any other law for the time being in force or agreement, a lessee shall not be evicted, except in accordance with the provisions of this Act. (2) The Rent Control Court on an application made to it by the lesser, in the prescribed manner, make an order for the recovery of possession of the building on one or more of the following grounds, namely:- (a) that the lessee has neither paid nor tendered the whole of the arrears of rent and other charges recoverable under the provisions of this Act from him within two months from the date on which a notice of demand for payment of such amount has been served on him by the lesser in the manner provided in section 106 of the Transfer of Property Act, 1882 (Central Act 4 of 1882);
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(b) that the lessee has without the consent in writing of the lesser has sublet, assigned or otherwise parted with the possession of the whole or any part of the building; (c) that the lessee has used the building for a purpose other than that for which it was let without obtaining the consent in writing of the lesser; (d) that the building was let for use as a residential or commercial one and the lessee has not been occupying therein, without reasonable cause, for a period of six months immediately before the date of the filing of the application for the recovery of possession thereof; (e) that the building or any part thereof has become unsafe or unfit for human habitation; (f) that the lesser requires the building for carrying out the repairs or reconstruction which cannot be carried out without the building being vacated;
(g) that the building or any part thereof are required by the lesser for the purpose of immediate demolition ordered by the Government or a Local Self Government Institution or any other competent authority or the building is required by the lesser to carry out any work in pursuance of any improvement scheme or
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development scheme and that such work cannot be carried out without the building being vacated; (h) that the building is required by the lesser for the purpose of repairs or reconstruction or make thereto any substantial addition or alteration including construction on the terrace or on the appurtenant land and that such repairs or reconstruction or addition or alteration cannot be carried out without the building being vacated: Provided that no order for the recovery of possession under clause (f), (g) or (h) shall be made unless the Rent Control Court is satisfied that the plan and the estimate of such repairs or re-construction, as the case may be, have been properly prepared and that the lesser has necessary means to carry out the said repairs or re-construction; (i) that the building consists of not more than two floors and the same are required by the lesser for the purpose of immediate demolition with a view to re-build the same:
Provided that where the possession of the building has been recovered under clause (f), (g) or (h), a lessee so dispossessed shall have a right of first option to get the reconstructed building or such portion of the reconstructed building equivalent in area to the
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original building in which he was a lessee on new terms agreed upon by the parties or fixed by the Court after reconstruction in appropriate proceedings; (j) that the lessee, his spouse or children ordinarily living with him have, whether before or after the commencement of this Act, built or acquired vacant possession of, or been allotted any building which is suitable for his use: Provided that the Rent Control Court may in appropriate cases allow such period to the lessee to vacate the building as it may permit but not exceeding one year from the date of passing the order of eviction; (k) that the building was let to the lessee for use as a residence by reason of his being in the service or employment of the lesser, and that the lessee has ceased, whether before or after the commencement of this Act, to be in such service or employment: Provided that no order for the recovery of possession of any building shall be made on this ground where the Rent Control Court is of the opinion that there is a bonafide dispute as to whether the lessee has ceased to be in the service or employment of the lesser;
(l) that the lessee has, whether before or after the commencement of this Act, caused or permitted to be caused
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substantial damage to the building or such alteration to the building as has the effect of changing its identity or diminishing its value substantially; (m) that the lessee or any person residing with the lessee has been convicted for causing nuisance or annoyance to a person living in the neighborhood of the building or has been convicted for using or for allowing the use of the building for an immoral or illegal purpose; (n) that the lessee has, inspite of the previous notice, used or dealt with the building in a manner contrary to any condition imposed on the lesser by the Government or the Local Self Government Institution while giving him a tenancy of the land on which the building is situate: Provided that no order for the recovery of possession of any building shall be made on this ground if the lessee, within such time as may be specified in this behalf by the Rent Control Court, complies with the condition imposed on the lesser by any of the authorities referred to in this clause; (o) that the lessee, in his reply having denied the ownership of the lesser, has failed to prove it or that such denial was not made in a bonafide manner;
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(p) that the person in occupation of the building has failed to prove that he is a bonafide lessee; (q) that the building let for residential or non-residential purpose shall be required, whether in the same form or after re-construction or re-building, by the lesser for occupation for residential or non-residential purpose for himself or for any member of his family if he is the owner thereof or for any person for whose benefit the building is held and that the lesser or such person has no other reasonably suitable accommodation: Provided that where the lesser has acquired the building by transfer, no application for the recovery of possession of such building shall lie under this clause unless a period of one year has elapsed from the date of the acquisition; Explanation I.- Building let for a particular use may be required by the lesser for a different use if such use is permissible under law. Explanation II.- For the purpose of this clause or section 22, 23, 24 or 25 an occupation by the lesser of any part of a building of which any building let out by him forms a part shall not disentitle him to recover the possession of such building;
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(r) that the lessee fails to deliver the possession after notice by the lesser to vacate after the expiry of the period of tenancy specified in the agreement. (3) In any proceedings for eviction under clauses (f), (g), (h) of sub-section (2) of this section or section 22 or section 23 or section 24 or section 25, the Rent Control Court may allow eviction from a part of the building if the lesser agrees to the same: Provided that in case of part eviction, the rent and other charges payable, if any, by the lessee shall be decreased in proportion to the part evicted. 21. Restriction against eviction not applicable to certain lessees.– Nothing contained in section 20 shall apply to a lessee of a residential building for which the monthly rent is more than ten thousand rupees, of a commercial building for which the monthly rent is more than twenty thousand rupees and the eviction in such cases shall be governed by the conditions contained in the tenancy agreement and the provisions of the Transfer of Property Act, 1882(Central Act 4 of 1882).
22. Right to recover immediate possession of the building to certain persons.-(1) Where a person in occupation of any residential building allotted to him by the Government or any
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authority is required by, or in pursuance of, any general or special order made by the Government or authority to vacate such residential building, there shall accrue, from the date of such order, to such person, notwithstanding anything contained in this Act or in any other law for the time being in force or in any tenancy agreement, whether express or implied, custom or usage to the contrary, a right to recover immediate possession of any building let by him, his spouse or his children, as the case may be. (2) Where a lesser exercises the right to recover possession under sub-section (1) of this section or section 20, 23, 24 or 25 and had received,- (a) any rent in advance from the lessee, he shall refund to the lessee such amount as represents the rent payable for the unexpired portion of the tenancy period or tenancy by depositing the same before the Rent Control Court on the date on which the delivery is to be effected or two weeks prior to the date fixed for the delivery of possession;
(b) any other charges payable he shall, in a like manner refund to the lessee a sum which shall bear the same proportion to
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the total amount so received, as the unexpired portion of the tenancy period or tenancy: Provided that any default is made in making any refund, the lesser shall be liable to pay simple interest at the rate of twelve per cent per annum on the amount which he has failed to refund: Provided further that the lesser may be permitted to set off any amount which he is lawfully entitled to recover from the lessee against the refund due to the lessee. 23. Right to recover immediate possession of the building to the members of the Armed Force.- (1) Where a person,- (a) is a person retenancyd or retenancyd from any Armed Forces and the building let out by him, his spouse or his children, as the case may be, is required for his own residence; or
(b) is a dependent of a member of any Armed Forces who has been killed in action and the building let by such member is required for the residence of the family of such member. Such member, his spouse or his children, as the case may be, may, within one year from the date of his retenancy or retirement from such Armed Forces or one year from the date of death of such member or within a period of one year from the date of commencement of this
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Act, whichever is later, apply to the Rent Control Court for the recovery of immediate possession of such building. (2) Where a person is a member of any of the Armed Forces and has a period of less than one year preceding the date of his retirement and the building let by him, his spouse or his children, as the case may be, is required for his own residence after his retirement, he, his spouse or his children, as the case may be, at any time, within a period of one year before the date of his retirement, apply to the Rent Control Court for recovery of immediate possession of such building. (3) Where the person, his spouse or his children referred to in sub-section (1) or sub-section (2) has let more than one building it shall be open to him, his spouse or his children, as the case may be, to make an application under sub-section (1) or sub-section (2) in respect of any one of the buildings of his choice. Explanation:- For the purposes of this section “Armed Forces” means an Armed Force of the Union constituted under an Act of Parliament.
24. Right to recover immediate possession of building by the Central Government and State Government employees.- (1) Where a person is a retired employee of the Central Government or of a
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State Government and the building let by him, his spouse or his children is required for his own residence such person, his spouse or his children, as the case may be, may within one year from the date of his retirement or within a period of one year from the date of commencement of this Act, whichever is later, apply to the Rent Control Court for the recovery of immediate possession of such building. (2) Where a person is an employee of the Central Government or of a State Government and has a period of less than one year preceding to the date of his retirement and the building let by him or his spouse or his children is required by him for his own residence after his retirement, he, his spouse or his children, as the case may be, may, at any time within a period of one year before the date of retirement shall apply to the Rent Control Court for the recovery of immediate possession of such building. (3) Where a person, his spouse or his children referred to in sub-section (1) or sub-section (2) has let more than one building, it shall be open to him to make an application under sub-section (1) or sub-section (2) in respect of anyone of the buildings of his choice.
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Explanation:- For the purposes of sections 22, 23 24 and 25, “immediate possession” means possession recoverable on the expiry of sixty days from the date of the order of eviction. 25. Right to recover immediate possession of the building by widows, persons with disability and senior citizens.- (1) Where the lesser is,- (a) a widow and the building was let by her or by her deceased husband; or (b) a person with disability and the building was let by him; or (c) a person who is of the age of sixty years or more and the building was let by him, required by her or him or for her or his family or for any one ordinarily living with her or him for residential or non-residential purpose, such person may apply to the Rent Control Court for the recovery of immediate possession of such building. (2) Where the lesser referred to in sub-section (1) has let more than one building, it shall be open to him to make an application under sub-section (1) in respect of any one of the residential buildings or any one of the non-residential buildings, as the case may be, of his choice.
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Explanation I.- For the purpose of this section, “person with disability” means a person referred to in clause (l) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (Central Act 1 of 1996) or clause (f) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (Central Act 44 of 1999). Explanation II.- The right to recover possession under this section shall be exercisable only once in respect of residential and non-residential building.
26. Payment of rent during eviction proceedings.- (1) In a proceeding for the recovery of possession of any building on any ground, the lesser may, at any stage of the proceedings, make an application to the Rent Control Court for passing an order against the lessee to pay the lesser the amount of rent legally recoverable and the Rent Control Court may, after giving the parties an opportunity of being heard, make an order directing the lessee to pay to the lesser or deposit with the Rent Control Court within one month from the date of such order, an amount calculated at the rate of rent last paid for the period for which the arrears of the rent were legally recoverable from the lessee including the period subsequent
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thereto upto the end of the previous month in which payment or deposit is made and continue to pay or deposit, monthly by the fifteenth day of each succeeding month, a sum equivalent to the rent at that rate. (2) In any proceedings referred to in sub-section (1) and where there is any dispute as to the amount of rent payable by the lessee, the Rent Control Court may, within fifteen days from the date of the first hearing of the application, fix an interim rent in relation to the building, to be paid or deposited in accordance with the provisions of sub-section (1) until the rent in relation thereto is determined under the provisions of this Act and the amount of arrears, if any, calculated on the basis of the rent so determined shall be paid or deposited by the lessee within one month from the date on which the standard rent is fixed or such further time as the Rent Control Court may allow in this behalf.
(3) In any proceedings referred to in sub-section (1), where there is any dispute as to the person or persons to whom the rent is payable, the Rent Control Court may direct the lessee to deposit with the Rent Control Court the amount payable by him under sub- section (1) or sub-section (2), as the case may be, and in such case, no person shall be entitled to withdraw the amount so deposited
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until the Rent Control Court decides the dispute and makes an order for the payment of the same. 27. Recovery of possession for occupation and re-entry.- (1) Where a lesser recovers possession of any building from the lessee in pursuance of an order made under clause (q) of sub-section (2) of section 20 or under section 23, 24 or 25, the lesser shall not, except with the permission of the Rent Control Court in the prescribed manner, re-let the whole or any part of the building within three years from the date of obtaining such possession: Provided that where a lesser recovers possession of any building from the lessee in pursuance of an order made under clause (q) of sub-section (2) of section 20 for occupation after construction or rebuilding, the period of three years shall be reckoned from the date of completion of reconstruction or rebuilding, as the case may be.
(2) Where the lesser recovers possession of any building under section 20,22(q),23,24 or 25 and the building is not occupied by the lesser or by the person for whose benefit the building is held, within two months of obtaining such possession, or the building so occupied is, at any time within three years from the date of obtaining possession, re-let to any person other than the evicted
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lessee without obtaining the permission of the Rent Control Court, the Rent Control Court may on an application direct the lesser, if the lessee has not already built, acquired vacant possession of or been allotted the building, to put the lessee in possession of the building on the same terms and conditions or on new terms and conditions, if the building have been re-constructed or re-built or to pay him such compensation as the Rent Control Court thinks fit or with both as the facts and circumstances of the case may warrant. 28. Recovery of possession for repairs or re-construction and re-entry.- (1) The Rent Control Court may, while making an order on the grounds specified in clause (e), (f), (g) or (h) of sub- section (2) of section 20, fix the new rent and ascertain from the lessee whether he elects to be placed in occupation of the building or part thereof from which he is to be evicted and if the lessee so elects, shall record the fact of the selection in the order and specify therein the date on which he shall deliver possession to the lesser so as to enable him to commence the work of repairs of the building or reconstruction, as the case may be and the date on which the lesser shall deliver the possession of the said building to the lessee.
(2) Where the lessee delivers possession on or before the date specified in the order, the lesser shall, on the completion of the
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work of repairs of the building or re-construction, put the lessee in occupation of the building or part thereof before the date specified in sub-section (1) or such extended date as may be specified by the Rent Control Court by an order. (3) Where the lessee has delivered possession on or before the date specified in the order and the lesser fails to commence the work of repairs of the building or re-construction within three months from the date specified, the Rent Control Court may, on an application by the lessee, order the lesser to put the lessee in occupation of the building on the same terms and conditions or on revised terms and conditions and to pay to the lessee such compensation as the Rent Control Court may thinks fit. (4) A lesser may, after repairs or re-construction of the building apply to the Rent Control Court for an order directing the lessee to put the lesser in possession of the building if he bonafide needs the building for his own occupation or for the occupation by any member of his family depended on him:
Provided that if the lesser has another building of his own in his possession in the same city, town or village no such order of direction shall be issued except where the Rent Control Court is
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satisfied that for special reasons, in any particular case it shall be just and proper to do so: Provided further that the Rent Control Court shall not give any such direction to a lessee to put the lesser in possession, if such lessee is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and there is no other suitable building available in the locality for such person to carry on such trade or business: Provided also that no lesser whose right to recover possession arises under an instrument of transfer inter vivo shall be entitled to apply to be put in possession until the expiry of one year from the date of the instrument. Provided also that if a lesser after obtaining an order to be put in possession transfers his rights in respect of the building to another person, the transferee shall not be entitled to be put in possession unless he proves that he bonafide needs the building for his own occupation or for any member of his family depended on him.
29. Recovery of possession in case of tenancies for limited period.- (1) Where a lesser after obtaining the permission of the Rent Control Court, in the prescribed manner, lets the whole of the
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building or part thereof as a residence for such period, not being more than five years, as may be agreed to in writing between the lesser and the lessee and the lessee does not, on the expiry of the said period, vacate such building, then, notwithstanding anything contained in section 20 or in any other law, the Rent Control Court may, on an application by the lesser place the lesser in possession of the building or part thereof by evicting the lessee. (2) The Rent Control Court shall not,- (i) grant permission under sub-section (1) in respect of a building for more than two times consecutively except for good and sufficient reasons to be recorded in writing. Explanation.- A permission granted under sub-section (1) shall not be construed to be consecutive, if a period of five years or more has elapsed after the expiry of the last limited period of tenancy. (ii) entertain any application from the lessee calling in question the bonafides of the lesser in letting the building under this section.
(3) All applications made before the Rent Control Court and appeals made before the Appellate Authority by the lessee shall
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abate on the expiry of the period for which permission has been granted under sub-section (1). (4) While passing an order under sub-section (1), the Rent Control Court may order damages to the lesser for the use or occupation of the building at double the last rent paid by the lessee together with interest at the rate of twelve per cent per annum for the period from the date of such order till the date of actual vacation by the lessee. 30. Special provision for recovery of possession in certain cases.- Where the lesser in respect of any building is a company or other body corporate or a co-operative society or a public institution then, notwithstanding anything contained in section 20 or in any other law for the time being in force the Rent Control Court may, on an application by such lesser, place the lesser in possession of such building by evicting the lessee, if the Rent Control Court is satisfied that,- (a) the lessee to whom such building was let for use as a residence at a time when he was in the service or employment of the lesser, has ceased to be in such service or employment and the building is required for the use of employees of such lesser; or
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(b) the lessee has acted in contravention of the terms, express or implied, under which he was authorised to occupy such building; or (c) any other person is in unauthorized occupation of such building; or (d) the building is required bonafide by the lesser for the use of employees of such lesser or, in the case of a public institution, for the furtherance of its activities. Explanation.- For the purposes of this section, “public institution”, includes any educational institution, library, hospital and charitable dispensary but does not include any such institution set up by a private individual or group of individuals whether incorporate or not.
31. Permission to construct additional structures. – Where the lesser proposes to make any improvement in, or construct any additional structure on, any building which has been let to a lessee and the lessee refuses to allow the lesser to make such improvement or construct such additional structure and the Rent Control Court, on an application by the lesser, is satisfied that the lesser is ready and willing to commence the work and that such work will not cause any undue hardship to the lessee, the Rent Control Court may
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permit the lesser to do such work and may make such other order as it thinks fit. 32. Special provision regarding vacant building sites.- Not- withstanding anything contained in section 20, where any building which has been let comprises vacant land upon which it is permissible under the Building Rules for the time being in force, to erect any building, whether for use as a residence or for any other purpose and the lesser proposing to erect such building is unable to obtain possession of the land from the lessee during the tenancy period and the Rent Control Court, on an application by the lesser, is satisfied that the lesser is willing to commence the work and that the severance of the vacant land from the rest of the building will not cause undue hardship to the lessee, the Rent Control Court may,- (a) direct such severance; or (b) place the lesser in possession of the vacant land; or (c) determine the rent payable by the lessee in respect of the rest of the building; or (d) make such other order as it thinks fit in the circumstances of the case.
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33. Vacant possession to lesser.- Notwithstanding anything contained in any other law for the time being in force, where the interest of a lessee in any building is determined for any reason whatsoever and any order is made by the Rent Control Court under this Act for the recovery of possession of such building, the order shall, subject to the provisions of section 32, be binding on all persons who may be in occupation of the building and vacant possession thereof shall be given to the lesser by evicting all such persons therefrom: Provided that nothing in this section shall apply to any person who has an independent title to such building. 34. Constitution of Rent Control Court.- The Government may, by notification in the Gazette, appoint a person who is or is qualified to be appointed as a Munsiff to be the Rent Control Court for such local area as may be specified therein. 35. Appointment of Inspectors.- (1) The Government may by notification in the Gazette appoint such officers as they think fit to be Inspectors for the purpose of this Act and may assign to them such local limits of jurisdiction.
(2) The Inspectors may for the purpose of any investigation or enquiry under this Act enter any building, in the manner as may be prescribed.
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36. Appointment of Valuers.- The Government may, by notification in the Gazette, appoint officers as Valuers for any area having such qualification, as may be prescribed. 37. Duties and Powers of Valuer.- (1) The Valuer shall assist the Rent Control Court in fixing the standard rent for any building in respect of which an application for fixation of standard rent is pending before the Rent Control Court. (2) The Valuer shall, having regard to the situation, location and condition of the building, and the amenities provided therein, and where there are similar or nearly similar buildings in the locality, having regard to the rent payable in respect of such buildings, submit a report to the Rent Control Court indicating in detail the method of calculation of standard rent fixed by him and stating the reasons for his conclusion. (3) The Valuer shall prepare and submit the report for the purposes of section 8.
38. Execution of Orders.- Every order made by the Rent Control Court and every order passed in an appeal shall after the expiry of the time allowed therein, be executed by the Munsiff’s Court or if there are more than one Munsiff’s Court by the Principal
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Munsiff’s Court having original jurisdiction over the area in which the building is situate as if it were a decree passed by it. 39. Decisions which have become final not to be reopened.- The Rent Control Court shall summarily reject any application under section 20 of the Act, which arises between the same parties or between parties under whom they or any of them claim substantially the same issue as have been finally decided in a former proceedings under this Act or under the corresponding provisions of any law in force prior to the commencement of this Act or the corresponding provisions of any law repealed by this Act. 40. Constitution of Appellate Authority.- The Government may, by general or special order, notified in the Gazette, confer on such officers and authorities not below the rank of a District Judge, the powers of Appellate Authorities for the purpose of this Act in such areas or in such classes of cases as may be specified in the order.41. Appeal.- (1) Any person aggrieved by an order passed by the Rent Control Court may, within thirty days from the date of such order, prefer an appeal in writing to the Appellate Authority having jurisdiction in the manner as may be prescribed.
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(2) On such appeal being preferred, the Appellate Authority may order the stay of further proceedings in the matter, pending decision on the appeal. (3) The Appellate Authority may call for the records of the case from the Rent Control Court and after giving the parties an opportunity of being heard and, if necessary, after making such further inquiry as it thinks fit shall decide the appeal. Explanation.– The Appellate Authority may, while confirming the order of eviction passed by the Rent Control Court, grant an extension of time to the lessee for putting the lesser in possession of the building. (4) The Appellate Authority shall also have all the powers of the Rent Control Court including power for fixing the arrears of rent. (5) The decision of the Appellate Authority, on an order of the Rent Control Court, shall be final and shall not be called in question in any Court of law.
42. Costs.- Subject to such conditions and limitations, if any, as may be prescribed, the costs and incidental expenses to all proceedings before the Rent Control Court or before the Appellate Authority shall be the discretion of the Rent Control Court or the
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Appellate Authority, as the case may be, which shall have full power to determine by whom or out of what property and to what extent such costs are to be paid and to give all necessary directions for the purpose. Explanation. – The Appellate Authority may set aside or vary any order passed by the Rent Control Court with regard to the costs and the incidental expenses to the proceedings. 43. Power to remand.– While disposing of an appeal under this Act, the Appellate Authority may remand the case for fresh disposal by giving such directions as it may think fit. 44. Order under the Act to be binding on sub-lessee.- (1) Any order for the eviction of a lessee passed under this Act shall be binding on all sub-lessees under him, whether they are parties to the proceedings or not, provided such order was not obtained by fraud or collusion. (2) Where sub-tenancy is allowed under the original tenancy agreement, the sub-lessees shall be made a party to the proceedings if notice of the sub-tenancy had been given to the lesser.
45. Proceedings by or against legal representatives.- The provisions of section 146 and Order XXII of the Code of Civil
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Procedure, 1908 ( Central Act 5 of 1908) shall, as far as possible, be applicable to the proceedings under this Act. 46. Summons etc.– (1) The Rent Control Court and the Appellate Authority shall subject to such conditions and limitations, as may be prescribed, have the powers which are vested in a Civil Court under the Code of Civil Procedure, 1908 (Central Act 5 of 1908) while trying a suit in respect of the following matters,- (a) discovery and inspection; (b) enforcing the attendance of witnesses and requiring the deposits for their expenses; (c) compelling the production of documents; (d) examination of witnesses on oath; (e) granting adjournments ; (f) reception of evidence taken on affidavit; (g) issuing commission for the examination of witnesses and for local inspection; (h) setting aside exparte orders; only once at the instance of the same party.
(i) enlargement of time originally fixed or granted; subject
to the maximum specified in the relevant section.
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(j) power to amend any defect or error in orders or proceedings; and or (k) power to review its own order. (2) The Rent Control Court or the Appellate Authority may summon and examine suo motu any person whose evidence appears to it to be material, and it shall be deemed to be a Civil Court within the meaning of sections 345 and 346 of the Code of Criminal Procedure, 1973 (Central Act 2 of 1974). 47. Penalties.- (1) Where any lessee sub-lets, assigns or otherwise parts with the possession of the whole or part of any building in contravention of the provisions of clause (b) of sub -section (2) of section 20, the Rent Control Court may impose on the lessee a fine of five thousand rupees or double the rent received by the lessee for sub-letting for every month till such time the cause of the complaint ceases, whichever is more and the amount shall be paid to the lesser. (2) Where a lesser contravenes the provisions of the sub-section (2) of section 27, the Rent Control Court may impose a fine which may extend to six months’ rent of the building and may be ordered to be paid to the lessee.
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(3) Where the lessee has delivered possession and the lesser fails to commence the work of repairs of the building or re-construction, as the case may be, within three months from the specified date under sub-section (1) of section 28, the Rent Control Court may impose a fine equivalent to rent for three months and the same shall be ordered to be paid to the lessee and the tenants right to re-entry shall be lost. (4) Where a lessee fails to make re-entry under sub- section (2) of section 27 within three months from the date of the completion of repairs of the building or reconstruction, as the case may be, after receipt of the intimation in writing by the lesser, the Rent Control Court may impose a fine equivalent to three months’ rent of the building and may be ordered to be paid to the lesser and the lessee’s right to re-entry shall be lost. 48. Time within which proceedings have to be completed.- The Rent Control Court or the Appellate Authority shall, pass final orders in any proceedings before it within six months from the date of appearance of the parties thereto. 49. Power to make rules.- (1) The Government may, by notification in the Official Gazette, make rules for the purpose of carrying out the provisions of this Act.
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(2) In particular and without prejudice to the generality of the foregoing powers such rules may provide for,- (a) the manner in which the application under sub-section (1) of section 8 shall be made; (b) the manner of depositing rent and other charges payable under sub-section (1) of section 13; (c) the manner of sending copy of application to the lesser under sub-section (2) of section 13; (d) the manner in which the rent or other charges to be paid to the applicant under sub-section (3) of section 13; (e) the manner in which the entry and the inspection by the lesser or a person authorised by him in a building under sub-section (2) of section 18 shall be conducted; (f) the manner in which application under sub-section( 2) of section 20 shall be made; (g) the manner in which permission of the Rent Control Court shall be obtained by the lesser under sub-section (1) of section 29; (h) any other matter which has to be or may be prescribed; and
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(i) all matters expressly required or allowed by this Act to be prescribed. (3) Every rule under this Act shall be laid as soon as may be after it is made before the Legislative Assembly while it is in session for a total period of fourteen days which may be comprised in one session or in two successive sessions, and if before the expiry of the session in which it is so laid or the session immediately following, the Legislative Assembly makes any modification in the rule or decides that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule. 50. Exemptions.- Notwithstanding anything contained in this Act, the Government may, in public interest or for any other sufficient cause, by notification in the Gazette, exempt any building or class of buildings belonging to Government / semi Government undertakings from all or any of the provisions of this Act.
51. Protection of action taken in good faith.- (1) No suit, prosecution or other legal proceedings shall lie against any person for anything which is in good faith done or intended to be done in
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pursuance of this Act or any rule, order or direction made or issued thereunder. (2) No suit or other legal proceedings shall lie against the Government, any officer or authority for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act, any rule, order or direction made or issued thereunder. 52. Power to remove difficulties.- (1) If any difficulty arises in giving effect to the provisions of this Act, the Government may, before the expiry of two years from the date of commencement of this Act, by order do anything not inconsistent with the provisions of this Act which appears to it necessary for removing the difficulty. (2) Every order issued under sub-section (1) shall be laid, as soon as may be after it is issued, before the Legislative Assembly.
53. Repeal and savings.- (1) The Kerala Buildings (Tenancy and Rent Control) Act, 1965 (2 of 1965) is hereby repealed. (2) Not withstanding such repeal, the Rent Control Courts and the Appellate Authorities constituted under the repealed Act shall continue to be the Rent Control Courts and the Appellate Authorities, as the case may be, constituted under this Act.
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(3) All investigations and proceedings pending before the Rent Control Courts and Appellate Authorities immediately before the commencement of this Act may be continued in accordance with the provisions of this Act.

The rights of a building Owner


The Rent Control Act gives very few rights to a building owner.  When courts refuse to give that limited rights also to the landlord/building owner it is an act which comes within the perview of unconstitutionality.

Bobby Mani

Rent Control: The Need for a Fresh Perspective


Experience over the past six decades or so has shown that rent control is an ineffective and often counterproductive housing policy. Rent control makes housing less affordable to anyone seeking housing in a rent-controlled market. Even people who already have a great deal, and who gain the most from the current rent control mechanism become prisoners of their own apartment. The inherent disadvantages that plague the system tends to overshadow the minor successes that it can boast of. This paper has proven that rent control legislations are at best a stopgap arrangement and an inadequate solution to a seething urban problem. The problem of housing shortage that plagues our urban centers requires serious thinking. Short-term solutions like rent control legislations only serve to aggravate the problems. Rent control may be a good idea for a country like India to adopt in the years that followed Partition in 1947. Perhaps it represented the only way to ensure that impoverished refugees from Pakistan were given access to housing at affordable rates. Had it not been for rent control, most of these unfortunate souls would have found themselves on the streets, being unable to afford the competitive market rents on offer. However, Delhi, and India, has progressed since those dark days. The United States of America and other nations in the Western world have realised that the World Wars and the extraordinary economic crises of the time are now behind them, and States in the USA in particular has been in the forefront of the anti-rent control drive. The time has come for the government in India to cautiously liberalise the rent control regime and to allow the rents to be determined by the prevailing market forces.

Despite the good intentions of the originators of rent control legislations, whose avowed purpose was to make housing affordable, the experience from around the world was quite the opposite. Dr. Anthony Downs, a leading economist and internationally recognized expert on housing policy, concluded in a recent report on rent controls, that, other than during wartime, the economic and social costs of rent control “almost always outweigh any perceived short-term benefits they provide.” As mentioned earlier, rent control policies in the USA are now becoming extremely unpopular. Many in that Country feel that “Rent control is a disease of the mind that soon becomes a disease of the market.” Thus, it is believed that those cities that succumb to the disease of rent control are doomed to never-ending house-to-house warfare over an ever-diminishing supply of unaffordable housing. The agreement that rent control needs to be abolished cuts across the usual political spectrum, ranging all the way from Nobel Prize winners Milton Friedman and Friedrich Hayek on the “right” to their fellow Nobel Laureate Gunnar Myrdal, an important architect of the Swedish Labor Party’s welfare state, on the “left.” Myrdal once stated, “Rent control has in certain Western countries constituted, maybe, the worst example of poor planning by governments lacking courage and vision.” As was aptly noted by Assar Lindbeck, a renowned Swedish economist in 1971, “Rent control seems in many cases to be the most efficient technique, next to bombing, so far known for destroying cities.”

Whether the successful de-regulation measures that have been adopted in the USA and other Western nations can be successfully replicated in India is the point in question. Whether the socio-economic conditions that prevail in our country today will allow for such far reaching changes is also debatable. Obviously, a total ban on rent control legislation would be a preferable, but does not seem likely in the Indian context. Instead, those cities that still suffer from rent regulation must look at the attempts made to reform the process in Maharashtra and Karnataka in a favourable light. These new Acts that have come into place have contributed in no small measure in the battle to eliminate the archaic and often useless provisions of the rent control laws that had been hitherto prevalent. Rent control promotes gross inequality and inefficiency and goes against established legal principles of justice, equity and fair play. The sooner we get rid of it, the better it is for the nation as a whole. Hopefully, this will lead to an urban regeneration in India and will act as the catalyst for the proper and controlled growth of cities, commercial establishments and industries

WHETHER RENT CONTROL CAN BE ABOLISHED



The negative consequences of rent legislation have become so massive and perverse that even many of its former supporters have spoken out against it. Existing rental units fare poorly under rent control. Even with the best will in the world, the landlord cannot afford to pay his escalating fuel, labor, and materials bills, to say nothing of refinancing his mortgage, out of the rent increase he can legally charge. The sitting tenant is, in a sense, protected by rent control but, in many cases, receives no real rental bargain because of improper maintenance, poor repairs and painting, and grudging provision of services. The enjoyment he can derive out of his dwelling space ultimately tends to be reduced to a level commensurate with his controlled rent. Apart from these factors, there also exists significant ‘consumer entry’ costs that exist in the rent control market and which tend to add vastly to the expenses of the potential tenant. Whenever a person wishes to obtain housing in a rent-controlled city, a considerable amount of time and money is spent in locating a suitable apartment. Invariably, consumers find it next to impossible to penetrate the closed market and are then forced to rely on the shadow market to fulfill their needs. Today, what is known as the “old lady effect” is sweeping through those countries that still retain rent control legislations. An American economist Walter Block has explained this by giving the example of a two-parent, four-child family that has occupied a ten-room rental dwelling. One by one the children grow up, marry, and move elsewhere. The husband dies and the lady is left with a gigantic apartment. She uses only two or three of the rooms and, to save on heating and cleaning, closes off the remainder. Without rent control she would move to a smaller accommodation. However, rent control makes that option unattractive. Economists say that these practices further exacerbate the housing crisis and that the repeal of rent control would free up thousands of apartments very quickly.

Some people wish to be a bit more cautious on this count and feel that a blanket ban on rent control would tear apart the social and cultural fabric that exists in cities. According to this school of thought, landlords must buy tenants out of their controlled dwellings. However, it is submitted that making property owners pay to escape a law that has victimized many of them for years is not an effective way to make them confident that rent controls will be absent in the future. The only thing that can be achieved by the ‘buy back’ alternative is that landlords can silence the opposition, or literally ‘buy them off’ and freeze rent control in the short run. One argument in favour of abolition of rent control will be that it will put an end to the withdrawal of apartments from the markets and make them accessible to a lot more people. New York in 1997 had only 3 percent of its apartments for sale falling in the regulated sector. The vast majority of the market for apartments was therefore fulfilled by the expensive and unreliable unregulated sector, and this was in a city where regulated housing makes up 63 percent of the market. In effect what the true situation in rent control housing markets today is that with the regulated portion market locked away, all new demand is funneled into the unregulated sector-the shadow market. Eventually the competition for these limited numbers of apartments creates highly inflated prices. It is like squeezing a balloon at one end–the pressure will simply create a bulge at the other end.

Normally, when people cannot find accommodation in the rent control areas, they will then be at the mercy of the shadow market where the costs of houses are considerably higher. It must be clarified at this juncture that prices in the deregulated section of the market do not represent the actual value of property in those areas under rent control. Shadow market prices are not the actual prices, yet this huge differential between the regulated market and the shadow market strikes terror into the hearts of a rent-controlled population and fuels the fires against deregulation. The American experience with deregulation has proven that an abolition of rental laws will not enable landlords to double and triple rents; on the contrary, the overall effect would be far more modest. The single biggest concern with abolishing rent control is the perception that all landlords will increase their rents in an unreasonable manner, leaving many former tenants in the lurch, and forced to seek out other alternatives. One solution that definitely cannot be used as a method of deregulation is vacancy decontrol. Under this system, apartments are deregulated only when the current tenant leaves or dies. The truth is that tenants in regulated apartments never move, since leaving an apartment means being thrown into the shadow market, therefore, it may take 20 to 50 years before the market resumes its normal shape. What is even worse is the prospect of landlords taking advantage of vacancy decontrol and thus using unlawful methods to pressurise their tenants from vacating. This system gives an incentive to the owners to do everything from hiring thugs to setting fire to their buildings to get rid of low-rent tenants.

By compiling relevant statistics and comparing cities that have regulated rent control environments with those that do not, economists have successfully proven that abolition of rent control will lead to an across-the-board lowering of rents and that this would lead to a Pareto optimal solution. Basu and Emerson in their paper visualise reform in the area of “tenancy rent control” or “second-generation rent control”- a model best exemplified by the rent control laws in New York. The model allows landlords to freely choose a nominal rent when taking on a new tenant (the tenant is of course free to reject the offer), but places restriction on raising rents on, or evicting, a sitting tenant. This causes erosion in the real value of rent if a tenant stays on for too long, whenever there is positive inflation in the economy, which for most economies is true most of the time. This means that landlords will prefer short-staying tenants to long-staying tenants. Under such a regime, if inflation exists, landlords prefer to rent to short-staying tenants. Since departure-date-contingent contracts are forbidden and a landlord cannot tell whether a tenant is a short-stayer, an adverse selection problem arises. In this case, the equilibrium is Pareto inefficient. Since a tenant’s type will be better known to the tenant than the landlord, the tenancy market will be characterized by asymmetric information. In most cases, the tenants stay on for very long periods of time and if at all they vacate, the house is passes on to friends or relatives. The latter pay what is known as ‘key costs’- the value of the property in the market at that point of time. Only rarely does the rent control market allow for mobility amongst the tenants. What Basu and Emerson state is that it can be shown that the presence of tenancy rent control will, in general, result in a Pareto sub-optimal equilibrium, whereas a system of free contract will be Pareto optimal. Free contract will lead to overcoming the problem of asymmetric information and will contribute to efficiency in the rental market; resulting in lower rents and that makes all tenants better off.

Thus while free contract will produce a Pareto optimal solution, Basu and Emerson believe that such a system would entail certain responsibilities on the part of the government. The government needs to provide a broad framework within which the contracts can be enforced. In addition to this, commonsense must be exercised to limit the terrain of permitted contracts to ensure that no party commits a breach of trust. If the government chooses to play an active role in bringing about deregulation, it could smoothen the process to a large extent. Increased construction of housing is the only proper remedy to the living space shortages in cities today. One way of stimulating the supply of affordable housing is through direct financial assistance to needy renters, whose increased purchasing power will lead to expansion of the quantity and quality of housing in the local market. Federal and State programs to this effect are in place in the United States. In addition, targeted programs to subsidize the construction or rehabilitation of affordable housing can be an effective complement to direct renter assistance and to ensure that new tenants will not be asked to pay a very high amount in order secure an affordable house of their liking.

A step-by-step deregulation can be considered an effective alternative to a complete ban on rent control. This has already been tested successfully in America where in 1994; the State of Massachusetts lifted rent controls immediately in the three cities, but a two-year extension was allowed for tenants qualifying for the federal definition of “low income”-less than 60 percent of the median for the region or 80 percent for the elderly and handicapped. These groups were finally deregulated on January 1997. Though such a program would take a longer amount of time, there does not appear to be any reason why it cannot work in India. Even then, a ten or fifteen year step-by-step phase out would be sufficient to root out rent control. Of course this would entail a great deal of co-operation and mutual trust between the government, landlords and the tenants, a situation which one cannot safely foresee any time in the near future. In Boston, at around the time when deregulation was coming into force, the landlords had helped their cause enormously by setting up the reserve bank of 200 apartments for emergency relocations. This was to provide a kind of a ‘safety net’ to those tenants who had been recently evicted and who were now seeking alternative accommodation.

A similar project in India in a city like Mumbai would need a thousand times the number of apartments, which could be used by former tenants, who would be on the lookout for accommodation in a deregulated market environment. Inspite of these disadvantages, an unhurried but well planned approach towards abolishing rent control should be sufficient to work in Indian cities. The only way to encourage private investment [which would boost new housing construction activity] is for the government to give an assurance that there will be no going back to the restrictive provisions of rent control legislations, which act as a severe deterrent to those wishing to consider the business opportunities in the housing sector. Obviously, until and unless a clear policy in favour of a phased withdrawal of rent control emerges, no real estate owner would be willing to spend enormous sums of money in constructing housing estates and then leasing them out to tenants at rates twenty times lower than the prevailing market rates.

THE HARMFUL EFFECTS OF RENT CONTROL


 The economic implications of rent control

 Inhibition of new construction projects: By forcing rents below the market price, rent control reduces the profitability of rental housing, directing investment capital out of the rental market and into other more profitable markets. Construction declines and existing rental housing is converted to other uses. When a community artificially restrains rents by adopting rent control, it sends the market what may be a false message. It tells builders not to make new investments and it tells current providers to reduce their investments in existing housing. Under such circumstances, rent control has the perverse consequence of reducing, rather than expanding, the supply of housing in time of shortage. To illustrate, in the United Kingdom, which had imposed rent control since the Second World War, the share of all housing provided through privately owned rental units dropped from 53 percent in 1950 to less than 8 percent in 1986, reflecting the flight of investment from the regulated market. In an unregulated market, a housing shortage [the reason usually cited for imposing rent control] will be addressed in a two-step process. In the short-term, rents on the margin will rise as consumers compete for available units. Over time, these higher rents will encourage new investment in rental housing through new construction, rehabilitation, and conversion of buildings from nonresidential to residential use, until the shortage of housing has been eliminated. Without the increased rents required to attract new investment, new housing construction would be sharply limited and there would be no long-term solution to the housing shortage. Conversely, a fall in rents sends the message to the market that there is no room for new investments.

Reduced consumer mobility: The primary beneficiaries of rent control are those consumers lucky enough to find themselves in a rent-controlled unit. But even these consumers pay a price. Consumer “mobility” is substantially reduced by the reluctance of many consumers to part with the rent control subsidy. A study in New York City found that rent control tripled the expected duration of residence. Consumers who would otherwise move to smaller or larger homes or closer to their jobs do not do so because they do not want to lose the subsidy. This loss of mobility can be particularly costly to families whose job opportunities are geographically or otherwise limited and who may have to travel long distances to reach those jobs available to them. The spill over effect includes increased demand for public services, traffic congestion, etc.

 

Deterioration of existing housing: By reducing the return on investments in rental housing, rent control also can lead to a drop in the quality and quantity of existing rental stock. This may take the form of cooperative conversions or, in some cases, abandonment of unprofitable property. It can also lead to a deterioration of the quality of housing stock as providers faced with declining revenues may be forced to substantially reduce maintenance and repair of existing housing. There are marked differences between rent-controlled and other units in housing quality and the level of expenditures on maintenance and repair, especially in cities like Mumbai and New York.

5.1.4. Reduction in property tax revenues and increase in administrative costs: Rent control reduces the market value of controlled rental property, both in absolute terms and relative to the increase in property values in unregulated markets. The tax implications of this reduction can be significant, as taxable assessed rental property values decline relative to unregulated property. A study of rent control in New York City calculated the loss in taxable assessed property values attributable to rent control at approximately $4 billion in the late 1980s. There is also a corresponding increase in administrative expenses, since rent controls require the creation of elaborate bureaucratic systems. Rental property must be registered; detailed information on the rental property must be collected; and elaborate systems for determining rents and hearing complaints and appeals must be established.

The phenomenon of the rise of “Shadow Markets”: This concept was developed by Denton Marks in a paper in the Journal of Urban Economics in 1984. It is virtually impossible for a government to control and regulate the entire supply of a commodity. Once a shortage appears, alternative markets and black markets will arise. More often than not, however, governments may tolerate these markets as a way of relieving shortages. In many instances, according to Marks, governments will deliberately leave a portion of the market untouched by regulation in order to serve as a safety valve for excess demand. This unregulated portion of a regulated market becomes the “shadow market.” Economists are of the view that prices in the unregulated portion of the market will be forced higher than their normal market value by rental restrictions. This is because the limited supply in the shadow market must absorb the shortage, the excess of demand over supply, in the regulated part of the market. Since prices are pushed too low in the regulated sector, they are forced above what would otherwise be the market price in the unregulated sector. The result is that average prices in both sectors are likely to end up about as high as their free-market level. They could end up higher because of misdistributions and diseconomies in the regulated sector of the market. The crux of the issue is that unsatisfied demand is diverted into this unregulated sector and because of the shadow-market effect, people in this sector pay higher-than-market prices. The poor, single individuals, and young people entering the market are especially hard-hit by these costs. This is in addition to consumer search costs that they have to incur in order to find suitable accommodation in regulated sectors of the market.

The social implications of rent control

 The adverse impact on the poor and disadvantaged sections of society: The costs of rent control fall disproportionately on the poor. Poor families suffer a marked decline in existing housing as the quality of existing housing falls in response to reduced maintenance expenditures. The middle class can move out; for many reasons, poorer families lack this option. Poor families also are at substantial disadvantages when it comes to finding new housing. In a tight market, there may be more people looking for housing than available rental units, thereby giving housing providers substantial discretion in choosing among competing potential consumers. In an unregulated market, the level of rents will govern this consumer selection process. However, by restricting rent levels rent control causes housing providers to turn to other factors, such as income and credit history, to choose among competing consumers. These factors tend to bias the selection process against low income families, particularly female- headed, single-parent households. Poor families tend to remain stuck to their houses, and have to continue there no matter how bad the living conditions are. Once they enter the unregulated market that is a by-product of rent control laws, they will be unable to afford the new rents, thus their mobility is severely restricted, if not impossible.

There is an increase in housing discrimination: This is a corollary to the first point. If the mobility of the poor is restricted, then they tend to be concentrated in certain areas, and this leads to increased levels of poverty. Also, the reduction in housing caused by rent control also can slow the process of racial and economic integration of many communities, by limiting the opportunities of certain classes of consumers to reside in rent-controlled communities. The owners of the houses know that since they cannot decide the level of rent that is to be paid by them, they may choose tenants on the basis of a potential consumer’s race, sex, family size or other improper or unlawful factors. This problem is especially serious in the United States where the rich or the middle classes use rent control as a method to exclude people belonging to the lower economic or social strata in society from residing amongst themselves. In fact, experience in the US state of California has shown that the moment new communities like Santa Monica develop, rent control limitations are imposed so that entry is severely curtailed, and these areas become exclusive and elitist zones, out of bounds to other sections of society.

Rent control invariably benefits the higher income householders more: It is indeed ironical that rent control legislations are viewed as an anti-poverty strategy in most countries and have been enacted with the intention to benefit the poor. However, the opposite is true in most cases. For example, a study of rent control [conducted in 1991] in New York City found that rent-controlled households with incomes greater than $75,000 received nearly twice the average subsidy of rent-controlled households with incomes below $10,000. It is also pertinent to note that rent control had the greatest effect on rents in Manhattan, the borough [New York is divided into five boroughs] with the highest average income. Similarly, a study of rent control in communities across the USA found that the beneficiaries of controls in those communities are “predominately white, well-educated, young professionally employed and affluent,” and that rent control had substantially increased the disposable income of these tenants while exacerbating the problems of low-income families. There are starker examples than these to be found in India. Well to do traders in Delhi’s Connaught Place pay just a nominal sum of a few hundred rupees a month as rent. In Mumbai, prosperous businessmen occupy entire apartment blocks in posh areas, but pay rents that have scarcely changed over the past six decades. Surely, these individuals can comfortably afford to pay the revised rents. It is a shame that the obstinate attitude of a few has the effect of endangering controlled and planned urban development, and more specifically new housing schemes in our cities.

Rent control imposed unfair costs on house owners/ landlords: Rent control legislations are the root cause for the current bitterness that exists between house owners and their tenants. What rent control does is to unfairly transfer income of the property owner to the tenants, or more importantly to the owners of any business that makes use of the rental property. Thus rent controls supplement consumer income at the expense of rental property providers, by holding below market levels the permissible rate of return on rental property investment. There is substantial evidence that such transfers are highly inefficient. A comprehensive study initiated during the heyday of rent control legislations in the 1970s concluded that housing consumers gained in benefits only 52 percent of what housing providers lost- this was a result of the tendency of consumers in rent-controlled units to “hoard” housing and to be over-housed. Thus rent control appears to fail the test of Pareto optimality, since it involves considerable loss to one side in the transaction. Ideally, either both sides should gain or else nobody must suffer a loss.

 

RENT CONTROL LEGISLATIONS IN INDIA


 
In this section I wish to focus on the rent control methods that have been adopted by the Government in three cities in India- New Delhi, Mumbai and Bangalore. These cities reflect the situation that prevails throughout the Country. While rent control laws have been revamped to a certain extent in Mumbai and Bangalore, New Delhi is still awaiting the implementation of revised rent control legislation.

New Delhi
The Delhi Rent Control Act (DRCA) came into force in 1958. The old Delhi Rent Control Act, or legislation like the Urban Land Ceiling and Regulation Act (ULCRA) introduced as a Central legislation in 1976, it must be kept in mind, were framed at a time when the intention was to ensure that ‘rich landlords’ did not terrorise ‘poor tenants’ by evicting them for a bit more filthy lucre. It was also intended to ensure that the rich were not able to accumulate huge tracts of land, far beyond what they needed for their personal use, so that even the less well off had a chance to buy land. However, quite predictably, as with most other socialist-style legislation, it had exactly the opposite effect. The Delhi Rent Act was introduced and approved by Parliament in 1995. The President gave his assent to the Act but strangely enough, the Delhi Government has not implemented it. This is indeed a piquant state of affairs, and it shows the clear influence of certain interest groups on the decision making process. It also brings to light the arbitrariness and unaccountability that plague the functioning of the executive in this country. While the Delhi Rent Act [1995] is an improvement on the existing legislation, since it appears to be only an overly cautious attempt at reform, it falls far short of what was required. However, tenant activists feel that Ease of eviction and limited inheritability are two features that would ruin small traders in old commercial areas.

The old legislation had several disadvantages, one of which was the restriction on sale or transfer of commercial properties which was responsible for the growth in “pugree”, the illegal institution of one time lump sum payment to the landlord by the tenant, primarily to offset the low rents. This was one of the major sources of generation of black money in India. The old Act had also led to the decline in the supply of rental housing in the Capital. Taking advantage of the old law, tenants refused to vacate property they had taken on rent, thus moderate-sized Connaught Place shops that cost a crore, were being rented out for as low as a few hundred rupees a month. , Section 6 of the Delhi Rent Control Act allowed a maximum of a 10% rent hike every three years, no matter what the inflation. In India the average inflation every three years has exceeded 20%. Sot the Act also made it virtually impossible to evict a tenant. This sorry state of affairs improved slightly when in 2002 the Delhi High Court struck down three sections of the Delhi Rent Control Act (DRCA), 1958 which virtually had “frozen” the rent of residential and commercial properties since the legislation came into force. For example, under Section 6 of the Act [which was struck down], considering devaluation of rupee since 1939, the Court said a house rented out for Rs 100 that year would merely fetch Rs 229 to a landlord in 1998, while the value of rupee had decreased from Rs 38.26 to Rs 2.97 during the same period. The Court decreed Sections 4, 6 and 9 of the Act as “ultra vires”, a Stated that these provisions were “arbitrary and unfair” to the landlords, the court said they were violative of the Constitution as they “affect landlord’s right to livelihood, right to life and avocation”.

The DRCA and the [now repealed] ULCRA had together succeeded in throttling development in Delhi and have ended up creating an enormous housing shortage- the very situation that was sought to be avoided by providing for regulatory mechanisms. The implementation of the revised rules would indeed be a boon to both house owners and tenants.

Karnataka
The old Karnataka Rent Control Act 1961 expired on 31.12.1999; this necessitated the promulgation of a new Karnataka Rent Control Act 2001. The Act is aimed at streamlining the entire rent determining process. An important feature is the attempt at curbing the practice of dodging income tax by fixing very low rent on the structure and hiking rent on fixtures. The rules specify that amount paid on these items should not exceed 15 per cent of the rent, while maintenance costs should not exceed 10 per cent of the rent. In order to bring in uniformity for fixation of standard rent, revision, enhancement and deemed rent, the rules provide for approval and registration of valuers. This provision that does away with the concept of static and unchanging rents represents one of the most significant features of the Act. In addition to this, the law has now made it compulsory to enter into written lease deeds thus abolishing the system of oral tenancies. Critics feel that the new law has altered the burden of proof in favor of the landlords and depriving the tenants the protection they received under the 1961 Act. They also believe that it would ruin the landlord-tenant relationship and wreak havoc on the legal system.

Maharashtra [including the city of Mumbai]
Thanks to the old Bombay Rent Act, 1947, Mumbai today presents the symbol of urban decay. The development of housing and infrastructure in the city has suffered immensely under the restrictive provisions of rent control legislation. The extreme regulation of rents by the Government has led to a situation where, in some case, some tenants are paying rents fixed as far back as 1940 since under the Bombay Rent Act, there was a “freeze” on the rent paid at the beginning. No further increase in the rents was permitted. The Act, which applied only to private premises, provided that rent in excess of the standard rent is illegal except where an agreement entered into before September 1, 1940 provides for periodic increases. The rent control laws led to the neglect of repairs and maintenance and had virtually frozen the municipal bodies’ income from property taxes, which are based on rateable values, which in turn are a function of the prevailing rents. Most if the buildings in Mumbai are in a state of disrepair and neglect because the landlords are not interested in taking up improvement works since the rent they receive is not enough to offset the costs of repair. People who occupy some of the prime properties in south Mumbai-some of the most valuable real estate in the Country, still continue to pay a princely sum of a few hundred rupees every month as rent. This anomalous situation can be attributed to the unjust provisions of the Rent Act.

The unified Maharashtra Rent Act, 1999 replaced the Bombay Rent Act, the jurisdiction of the former now extends throughout the State. The new act says that the rent may be increased by five per cent in the first year, after which landlords would be permitted to raise the rent by four per cent every year following that. They are also permitted to increase the rent by a reasonable amount, if any structural repairs are carried out on the building. This has provoked criticism from both sides to the issue. The landlord associations are displeased with the “small” five percent increase while several tenants’ rights bodies feel that the rents will escalate exorbitantly and therefore it is not a fairly framed act. Also, Under Section 55, all tenancy agreements, including leave and license agreements, must be in writing and are to be compulsorily registered after the commencement of the Act. There is a fear in Mumbai amongst tenant rights associations that adopting the rates and structure for escalation together with a rate of return of even 5 per cent would result in an overwhelming body of protected tenants being unable to meet the increased burden. Another objection to the new legislation raised by tenant associations is the fact that makes the eviction of tenants easier and the fact that it provides severe curbs on the right of inheritance of tenancies.

RENT CONTROL: A BRIEF HISTORY


Rent control is a relatively recent phenomenon in the world of economics. It has emerged over the past century, peaking during time of war and uncertainty such as the Second World War [1939-1945], but has been slowly dying out since the mid-1980s. In India, rent control really emerged in a big way in the years following the First World War. War Rent Restrictions that were imposed in the state of Bombay in the 1930s. This came about in the aftermath of the First World War when the accommodation scarcity in Bombay was very high. According to these restrictions, landlords could not exploit their tenants and only predetermined rents were to be paid. Unfortunately, these rent restrictions continued for over sixty years before they could be reformed. Rent control hit other parts of the Country after partition. Rehabilitation colonies were set up in Delhi, the capital city of independent India, as also in several cities. These rehabilitation colonies were planned residential areas with properly laid out roads, parks, community facilities, etc. It was also during this time that new towns and ‘model towns’ were developed. Further, the migration of people from various rural areas into the erstwhile Presidency towns, mostly from jobs in the newly formed central and state governments had led to a growing housing shortage in these big cities. This required the imposition of rent control.

The United Kingdom imposed rent control after the end of the Second World War in 1945. This was the first time it was being implemented in the British Isles, and the main object was to ensure that there was equitable distributing of houses at reasonable rates to all sections of society. Rent control in America is synonymous with its implementation in New York City. Rent controls were part of the temporary price controls imposed during World War II. This policy, known as the War Emergency Tenant Protection Act was meant to assist poorer residents and also to protect people from war related housing shortages. There was a fear that the return of troops from the battlefront would send rents skywards. Similar rent control legislations were in effect throughout the United States during the war years and for decades later.

Rent Control: an Introduction


1- INTRODUCTION
Rent and rent control are factors that often influence our lives in a major way. Many of us live in rented apartments and pay a regular fixed amount of money every month to a person who owns the apartment that we call home. Those of us lucky [and rich] enough to own several houses often rent them out for a pre-determined amount of money which the occupants of these houses pay us every month. Thus every month, a certain amount of money changes hands in this manner. This process is repeated across the world by hundreds of millions of people. The people who are not the actual owners of the premises which they occupy and who pay money to guarantee their right of residence are called tenants while the real owner who is compensated for renting out his premises is known as the landlord. The money that is paid every month by the tenant to the landlord is called ‘rent’. Rent can take several forms but in this paper I am restricting the definition to include only the payment of money by the tenant to the landlord in consideration for a allowing the former to occupy a house or a portion of a land or building which can then be used for commercial purposes.

It would an understatement to state that the issue of rent control has generated a passionate discussion amongst economists. This is one topic that is seen to be distinct from ‘dry’ economic theories, and infact, the twin issues of rent control and governmental interference in the determining of rent rates have been responsible for establishing or bringing down governments, both at the local and at the national level. First of all I would like to arrive at a basic understanding of the functions of rent and the meaning of ‘rent control’. Rents serve two functions essential to the efficient operation of housing markets and to the economy as a whole:

• They compensate providers of existing housing units and developers of new units for the cost of providing shelter to consumers; and
• They provide the economic incentives needed to attract new investment in rental housing, as well as to maintain existing housing stock.

Rent control, like all other government-mandated price controls, is a law placing a maximum price, or a “rent ceiling,” on what landlords may charge tenants. If it is to have any effect, the rent level must be set at a rate below that which would otherwise have prevailed. To put it simply, rent control relates to the fixing by the government of rent rates at a particular level, so that all tenants across the board who fall in a particular category pay the same amount of money to their landlords. Governments seek to enforce these controls through instruments of law by means of ‘rent control legislations’. These rent control legislations lay down the basic framework within which the government can enforce its strictures. They are seen to be weapons in the hands of the tenants against the profit minded tendencies of the landlords. The State steps in to ensure that by standardising rates at which properties are rented out, it ensures that a large number of its citizens have access to housing at affordable rates, something which a de-regulated market would have made impossible for them. It is a common misconception that rent control is the invention of communists and is followed only in socialist countries, but many will be surprised to note that it is prevalent across the world. Even to this day, rent control legislations flourish in the heart of free market capitalism-the United States of America.

The best-known example of rent control in action would be the rent control regime in place in New York City. Rent control in this city enslaves two million tenants and landowners to a control mechanism that has done more harm than good. In North America, economists are virtually unanimous in their condemnation of rent control. It is interesting to note that in a survey of economists of the American Economic Association, fully 93 percent agreed, “a ceiling on rents reduces the quality and quantity of housing available. “In India, the best examples of rent control would be the situation prevailing in Mumbai and Delhi. Rent control is a major election issue and political parties tend to procrastinate and prevent reforms in the archaic rent control laws in order to please their vote banks. The pathetic situation of the housing sector in the nation’s capital New Delhi serves as a perfect illustration of the politicization of rent control. In this context it is worth noting that fresh rent control regulations have been implemented in Maharashtra, Karnataka and Madhya Pradesh though Delhi is still stuck with an antique piece of a legislation that has led to a great deal of discontent and frustration amongst all sections of society. This paper will devote space to the arguments for and against rent control from both the American perspective and the Indian perspective.

There are some fundamental points that this paper will seek to address. First of all, I will advance the argument that the abolition of the rent control regime can result in an across-the-board lowering of rents. In doing so this paper shall prove how rent control results in actually driving out affordable housing from the areas that are under the regulation. To support this argument, examples of the experiences of American cities in the pre and post regulation scenario will be quoted. Secondly, the paper would like to explode the myth that rent control has benefited the poor and the vulnerable sections of society by providing them with affordable housing options. Thirdly emphasis will be placed on the government’s interference in a nation’s housing markets, which has lead to stagnation in the urban sector of the economy and has lead to profound economic and social consequences. This is because ultimately, the issue of rent control needs to be viewed in the larger perspective of urban development, rather than as a mere conflict of interest between tenant and landlord. Though these issues tend to overlap, they have been dealt with it in a concise yet cogent manner.