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Effect of Globalisation in the field of Rental Buildings

India has opened its door to globalization enabling Indian Economy to attain a growth rate which is unprecedented. The business community as a whole enjoys the benefit of globalization. The governmental control on various sectors are withdrawn and free market triggered the economic growth in all sectors of business activities except in rented building stock, thanks to the rent control laws in India. In Raval & Co v. K.G.R., AIR 1974 SC 818 our supreme court has addressed this problem and commented that fools build houses for the wise men to live in. When fools turned wise building stock reduced and as a result of reduced housing stock in the rental market the rent and key money shoot up.
The Ministry of Urban Development (Central Government) had formulated a policy on Urban development and formulated a model rent control act, and requested states to enact laws in tune with the model act. Further laid down stipulation that central fund for urban development can be availed by the states only if such rent control law is passed. One of the mandatory conditions for availing JNNRUM (Jawaharlal Nehru National Urban Renewal Mission) funds is to pass New Rent Control Act balancing the interest of landlords and tenants. Asian Development Bank also urged the States to amend the Rent Control Laws in order to attain sustained growth.

The Kerala legislature had brought a bill in 2002 in the name “The Kerala Buildings Lease Bill, 2002” and the Kerala Law Reforms Commission had brought a bill in 2008. Inspite of all this, the 1965 Act still exists with all its defects and judicial pruning. The Act 2 of 1965 passed by the Kerala Legislature has been modified with several amendments and judicial interventions. Anyway this special area of contracts requires a replacement by a new statute with time bound remedies to the landlords and tenants. The present law has not attained its aim, as the aim of the act is to ensure availability of building at a low rent to the needy.

The catelist for development of Kerala is this

The rent control Act balancing the interest of building owners and tenants will surely pave the way for development of Kerala in a healthy way. Commercial buildings and homes become cheaper and available for rent as the fear of losing the property is extinguished. More money will be injected into the system and the market will grow.