Some hope for landlords PDF Print E-mail
Tuesday, 17 May 2011 00:00
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Being a landlord in most cities can be quite traumatic if you can’t get the tenant to vacate, more so if you gave your property out several decades ago when rentals were very low. Most of the older commercial/residential areas in Indian cities fall in this category, and shopkeepers/offices give a few hundred rupees as rent for properties worth crores. To add salt to injury, local authorities often demand higher property tax rates in keeping with the escalating property values, never mind if the property yields just a few hundred rupees in rent. Landlords also need to ensure the properties are not allowed to fall into disrepair and, to the extent there is damage to anyone’s life, they are held responsible. To top it all, such tenancies are often inheritable. Landlords in the capital’s central Connaught Place (CP) shopping district were offered a ray of hope in the mid-1990s when Parliament passed amendments to the Delhi Rent Act, which made tenancies non-inheritable. The President even gave his assent but a last-minute push by the tenants’ lobby, the shopkeepers primarily, ensured this never got ‘notified’ into law.

Around 15 years later, while deciding a landlord-tenant dispute, a two-judge bench of the Supreme Court offers a fresh ray of hope to landlords across the country. According to the judges, most cases are filed because landlords don’t get a reasonable return, so the judges have come up with some guidelines. The judges recommend tenants hike rentals every 3 years and in cases where the rents have been fixed decades ago, “the present market rate should be worked out either on the basis of valuation report or reliable estimates of building rentals in the surrounding areas, let out on rent recently”. Property taxes and other charges (including when they are enhanced), the Court has said, should ideally be paid by the tenants so the landlord gets the full rent. Once market rentals are paid, tenants should be allowed to stay for at least 5 years. For an existing old lease, landlords can now theoretically send out notices to tenants asking for market rentals immediately, and demand termination should this not be accepted. Expect tenants to flock to the courts immediately. Unlike in the case of the amendments to the Delhi Rent Act, this time around the political class may not have as much of a role to play. The “guidelines and norms” that the Court has suggested are not a firm order that states have to implement; that the lower judiciary will be influenced by the judgment is stating the obvious.


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