New Tenancy Law Set to Transform Chandigarh’s Rental Ecosystem

Chandigarh’s rental housing market is all set for a major transformation after the Centre introduced a modern tenancy framework in the Union Territory. The reform replaces the decades-old East Punjab Rent Restriction Act, 1949, with the new Assam Tenancy Act, 2021. The Assam Tenancy Act 2021 is based on and aligned with the Model Tenancy Act, which was introduced by the Central Government. The move is aimed at making the rental market more transparent, efficient and balanced for the tenant and the landlords.

As per a report by ET Realty, this framework could exponentially change the rental market realities in Chandigarh, as nearly half of the population is accommodated in rented accommodations. Furthermore, it is expected that the new framework can formalise a large portion of the city’s informal rental market, which encourages more property owners to let out their properties for rent. This could improve rental housing supply while also stabilising rental prices in the city.

The main feature of the new tenancy law is the requirement of formal and written agreements. Every tenancy arrangement is now to be documented and submitted to the designated authority. Agreements will clearly specify the rent amount, duration of tenancy and other important clauses. The formulation of this agreement is the responsibility of both parties.

The reform also adds a limitation on the security deposits. Under the new laws, landlords can charge a maximum security deposit of only two months of rent for residential properties and sex months for commercial properties. This is expected to reduce the financial burden on tenants, especially young professionals and people who migrate to the city for work.

To make sure a quicker way of dispute resolution, Chandigarh will now have a three-layered adjudication mechanism which consists of the rent authority, the rent court and the rent tribunal. Tenancy disputes will not be handled through the traditional civil court system. Cases under the new framework are expected to be resolved within the first 60 days, with a limit on the adjournments permitted. A digital portal will be introduced as well, for registration and online submission.

These reforms are introduced to cater to the interests of landlords and tenants while also improving the contractual relationship between the parties.