India Gets An Updated Model Tenancy Act 2019 | Gulf News

India’s rental housing market, trammelled by archaic laws and ambiguity, is adapting to the pragmatic ameliorations outlined by Finance Minister Nirmala Sitharaman in her inaugural Union Budget 2019 speech. Sitharaman’s proposed regulations in the Indian realty market have since made way for the Model Tenancy Act 2019, drafted by the Ministry of Housing and Urban Affairs, that addresses the relationship between the lessor and lessee realistically and fairly.

The new tenancy law limits the security deposit to two months’ rent and lists heavy penalties for tenants overstaying and not adhering to the contractual terms of their rental agreements. An overstay will cost a tenant twice the rent for the first two months, that quadruples in the subsequent months. However, during such a period, the landlords are not allowed to cut off essential utilities like water and electricity. The Act also talks about creating special courts to deal with disputes between tenants and landlords and puts the obligation of carrying out repairs, maintenance and upkeep of the property like painting on the owner. While the landlord can’t increase the rent during the middle of the tenancy contract, the tenant can’t sublet the premises without prior consent of the owner. The Act aims to increase accountability in alignment with the government’s equitable development plans in the housing sector. The Centre has left it to the states to implement the Act or to amend it in accordance with their existing rental laws.

Mumbai | Rubina A Khan

Bandra-Worli Sea Link | Photo: Rubina A Khan

The Maharashtra government has decided to enact it for new constructions and introduce an amendment that protects properties governed by the Maharashtra Rent Control Act 1999. Landlords have domineered the rental business in India, and how, for far too long, especially in Mumbai, the only Indian city to feature in a top 20 list of expensive prime residential markets in the world recorded in Knight Frank’s Wealth Report 2019. In Mumbai, a real estate agent’s opening and closing has always been about what the owner wants, demands rather, barely skimming the surface of what a tenant wants, barring the monthly rent and astronomical security deposits. The broker is almost always submissive to an owner’s preferences, despite the tenant being as much a paying customer as the landlord. This parti pris dynamic needs to change along with the Act towards a balanced equation between tenants and landlords. Tenants need to rent and owners need their money – it’s a simple business deal and it’s about time it’s conducted like one.

The realty business in India is inescapably going to change with the Act, giving impetus to luxury rentals at the expense of buys. The biggest incentive in the rental sector is the security deposit being restricted to two months’ rent, allowing a tenant to utilise and invest the money for herself/himself, rather than blocking it with a landlord that earns interest off it. The Mumbai rental market stands to gain the most from the new Act.

Luxury rentals are far more fiscally appealing and viable with the new Act coming into play than ever before. The Act increases the confidence and security for both, landlords and tenants, getting into rental agreements aligned with the new norms, leaving minimum room for legal discord. Landlords will have to desist from imposing delusional demands on a tenant like sky-high security deposits and maintenance of the property and tenants will be legally bound to pay the weighty fines for overstay and misuse of a rented property.

This feature first appeared in Gulf News on August 3, 2019

©Rubina A Khan 2019

India’s Property Market Rides Election Wave | Gulf News

The triumphant win of Narendra Modi as Prime Minister of the Indian subcontinent for a second term, in the world’s largest election, has lent maximal credence to the country’s realty business in a manner most exceptional. The ruling government’s first term, contentiously driven by infrastructural development and financial realignments like Demonetization, RERA (Real Estate Regulation and Development Act) and GST (Goods & Service Tax) hit the cash-rich realty business particularly hard. Predictably, it was met with uproarious dissent. But, luxury realty seems to have taken a real turn since the legalized reorientations in the business, with antagonism giving way to smarts.

The luxe life is an addiction like no other. As long as there is human desire to live like royalty and be an in-your-face show-off, luxury real estate in India is headed forward. It stands at a profitable vantage point today, espousing all three acts, advantageous to both, builders and buyers. Indian realty expects investments to double to $10 billion in 2019. The paper trail and financial transparency accorded to the business is dominant, making it a streamlined, and somewhat trustworthy experience today. But there’s no denying that the business is devoid of the robustness and speed it once basked in, languishing ever so often in protracted sales.
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RERA seems to have had the most impact so far, not so much on newer developers as it has on the bigger players with large, unsold inventories, given it is now mandatory for 70 percent of the money to be deposited in bank accounts through cheques, restricting unaccounted money being flushed into the realty business. Aside from its financial transparency, a RERA requisite that’s very conducive to prospective buyers, is that builders are obliged to quote prices based on carpet area (inclusive of usable spaces like the kitchen and bathrooms) and not super built-up area. Having said that, RERA needs to hasten the pace, and frequency, in providing aggrieved buyers who need long overdue compensations from unscrupulous developers across India. The clean-up in the business has only just begun. It is anything but cleaned up, as far as realty racketeers are concerned, despite the new regulations and progressive revamps of archaic Indian property laws like Insolvency & Bankruptcy Code and the Benami Transactions (Prohibition) Act being in place. For the business to regain the implicit trust of consumers and hit immediate sale highs, compensating buyers for their losses is vital, and it should become a regular occurrence as compared to the rarity it is today.

Luxury residences and serviced luxury residences make for accelerated buys and sells in India, and rightly so, as time is a luxury the wealthy can’t afford to indulge in. Newer developers in Mumbai like Aditya Kilachand, Partner at Innovation Estates LLP, seem to be on the right beach of luxury realty, building villas by the sea in Alibag, a mere three-hour drive from Mumbai. Tapping into Alibag’s infrastructure, the improved connectivity and proximity to Mumbai, its existing community and fairly undervalued land prices is just realty forethought and judiciousness. Seven luxury serviced villas called L’Hermitage, custom-designed by Sussanne Khan of The Charcoal Project, will be ready for some serious selling upwards of 10CR by Sotheby’s International Realty India, come July 2019.
villWith all the luxury constructions and developments, there is a new shift in the market of late, that of “aspirational luxury” residences that aren’t remotely luxurious, barring their price points. Priced at 7CR upwards for a 3BHK in the business suburb of the Bandra Kurla Complex in Mumbai, these residences allude to a luxurious lifestyle with cleverly scripted and assertive marketing hype. The insides of these residential towers are at most basic, with a garden path, a swimming pool and some semblance of a gym thrown in, with views of the city’s under-construction skyline off a balcony, masquerading as luxury amenities. Needless to add, it’s a “white elephant” investment for owners as resale inventory is at its lowest and unrealistic rentals dictated by the builder’s team, with few takers, stand testimony to the “mimic luxe” gimmick it’s established on. These kind of constructions need to be reined in, as these will lead to a catastrophically high, over-priced, unsold inventory in the country that will affect consumers far more than the builders.

This feature first appeared in Gulf News on June 9, 2019

©Rubina A Khan 2019