From Informal Tenancies to Digital Compliance: How India’s Model Tenancy Framework is Reshaping Rental Housing and Commercial Leasing

Introduction

India’s rental housing market has historically operated within a fragmented and largely informal ecosystem. Residential and commercial tenancies have frequently been governed by oral arrangements, outdated rent control laws, unregistered agreements, and inconsistent state-level regulatory frameworks. While these informal arrangements offered flexibility, they also generated significant legal uncertainty concerning rent payments, security deposits, maintenance obligations, lease renewals, and eviction rights.

For decades, both landlords and tenants faced prolonged litigation arising from poorly drafted tenancy agreements and ambiguities regarding their respective rights and obligations. Traditional rent control legislation, while intended to protect tenants, often discouraged institutional investment in rental housing and constrained the development of a professionally managed rental market.

Recognising these challenges, the Government of India introduced the Model Tenancy Act, 2021 (“MTA”), with the objective of modernising India’s rental ecosystem, promoting formalisation, improving transparency, and encouraging investment in the rental housing sector.

Although the Model Tenancy Act is not automatically applicable across India and requires adoption by individual states and union territories, it has emerged as the blueprint for a new generation of tenancy regulation built around written agreements, digital compliance, specialised dispute resolution mechanisms, and balanced landlord-tenant rights.

Why India Needed Tenancy Reform

India’s rental market has long suffered from structural inefficiencies. Common issues include:

• Oral or informal tenancy arrangements;
• Non-registration of lease agreements;
• Excessive security deposit requirements;
• Delays in eviction proceedings;
• Uncertainty regarding maintenance obligations;
• Difficulty in rent recovery;
• Lack of reliable tenant and property records.

These challenges have traditionally resulted in significant litigation and discouraged the growth of organised rental housing. The Model Tenancy Act seeks to address these concerns by shifting the market from relationship-based renting to documentation-driven and compliance-oriented leasing practices.

The Model Tenancy Act, 2021: Key Objectives

The Model Tenancy Act was designed to achieve several policy goals:

• Formalisation of tenancy arrangements;
• Promotion of rental housing supply;
• Reduction of landlord-tenant disputes;
• Faster dispute resolution;
• Greater transparency in leasing transactions;
• Encouragement of institutional and private investment in rental housing.

Importantly, the Act seeks to strike a balance between landlord protection and tenant security, moving away from the heavily tenant-centric rent control framework that characterised many earlier state laws.

Mandatory Written Tenancy Agreements

One of the most significant reforms introduced under the Model Tenancy framework is the requirement that tenancy relationships be governed by written agreements.

The tenancy agreement is intended to serve as the primary legal document regulating:

• Rent payable;
• Security deposit;
• Duration of tenancy;
• Renewal rights;
• Maintenance obligations;
• Utility charges;
• Termination rights;
• Dispute resolution mechanisms.

This represents a major departure from the informal tenancy practices that continue to exist in many parts of India.

For commercial occupiers, corporate tenants, co-working operators, and retail businesses, the increased emphasis on documented tenancy arrangements improves legal certainty and risk management.

Digital Registration and Rent Authorities

A central feature of the Model Tenancy framework is the creation of Rent Authorities responsible for maintaining tenancy records and overseeing regulatory compliance. The framework contemplates digital submission and registration of tenancy information, enabling greater transparency and reducing disputes concerning occupancy and contractual terms.

Key information typically includes:

• Identity of landlord and tenant;
• Property details;
• Duration of tenancy;
• Rent payable;
• Security deposit;
• Renewal provisions.

The digitisation of tenancy records reflects a broader governmental trend towards technology-driven governance and improved record management. For landlords, digital registration strengthens evidentiary protection, and for tenants, it reduces the risk of arbitrary disputes regarding tenancy terms.

Security Deposit Reforms

Historically, security deposit requirements in several cities have ranged from six to twelve months’ rent, creating significant financial barriers for tenants. The Model Tenancy framework seeks to standardise security deposits and improve affordability. For residential premises, the Model Tenancy Act limits security deposits to a maximum of two months’ rent.

This reform is intended to:

• Improve tenant liquidity;
• Lower entry barriers into the rental market;
• Create greater uniformity in leasing practices.

While commercial leasing arrangements often continue to involve larger security deposits based on negotiated terms, the reform signals a broader policy move toward rationalisation of rental security requirements.

Rent Revision and Escalation Mechanisms

Disputes relating to rent increases are among the most common landlord-tenant conflicts. The modern tenancy framework emphasises transparency in rent escalation by encouraging:

• Clearly defined escalation clauses;
• Prior notice requirements;
• Contractual certainty regarding revisions.

The objective is to reduce arbitrary rent increases while preserving contractual freedom for both parties. For institutional landlords and commercial occupiers, predictable escalation mechanisms facilitate long-term financial planning and portfolio management.

Allocation of Maintenance Responsibilities

Another significant area of reform concerns maintenance obligations. Traditional tenancy disputes often arise because lease agreements fail to clearly allocate responsibility for repairs and upkeep. The Model Tenancy framework seeks to provide greater clarity by distinguishing between:

Landlord Responsibilities

• Structural repairs;
• Major building systems;
• Common area infrastructure;
• Essential services maintenance.

Tenant Responsibilities

• Routine upkeep;
• Minor repairs;
• Day-to-day maintenance resulting from occupancy.

This allocation reduces ambiguity and improves enforceability of contractual obligations.

Specialised Dispute Resolution Framework

One of the most transformative aspects of the Model Tenancy framework is the establishment of dedicated tenancy dispute resolution institutions.

These include:

• Rent Authority: Responsible for registration, compliance oversight, and preliminary administrative functions.
• Rent Court: Responsible for adjudicating tenancy disputes, eviction claims, and rent recovery proceedings.
• Rent Tribunal: Functions as the appellate forum for decisions of Rent Courts.

The objective is to reduce dependence on overburdened civil courts and provide faster resolution of tenancy disputes.

Eviction and Recovery Rights

The framework also introduces greater certainty regarding eviction rights. Landlords may seek recovery of possession under specified circumstances, including:

• Non-payment of rent;
• Expiry of tenancy;
• Unauthorized alterations;
• Illegal use of premises;
• Breach of tenancy conditions.

Importantly, the framework seeks to balance landlord rights with procedural safeguards for tenants. The emphasis is not on facilitating eviction but on ensuring predictability and legal certainty.

Holding Over and Unauthorized Occupation

The Model Tenancy framework introduces financial consequences for unauthorized occupation after expiry of a tenancy. The objective is to discourage prolonged possession without legal entitlement and reduce disputes arising from holdover tenancies.

For landlords, these provisions strengthen enforcement and for corporate occupiers and commercial tenants, they underscore the importance of advance planning for renewals, relocation, and exit management.

Impact on Commercial Leasing and Corporate Occupiers

Although tenancy reform is often discussed in the residential context, its implications for commercial real estate are equally significant. Corporate occupiers, retailers, co-working operators, logistics providers, and managed workspace platforms increasingly face compliance obligations relating to:

• Lease documentation;
• Registration requirements;
• Renewal management;
• Occupancy tracking;
• Exit planning.

Large organisations may need coordination among legal, finance, procurement, facilities management, and real estate teams to ensure compliance across multiple jurisdictions.

Emerging Compliance Challenges for PropTech and Co-Living Operators

Technology-driven real estate businesses face particularly complex compliance obligations. Co-living platforms, managed accommodation providers, and co-working operators frequently operate through layered contractual structures involving:

• Head leases;
• Sub-leases;
• Licence agreements;
• Occupancy arrangements.

The evolving tenancy framework requires careful alignment between these contractual relationships to minimise regulatory and litigation risks.

Practical Compliance Checklist

Landlords, tenants, and commercial occupiers should consider:

• Reviewing existing tenancy agreements;
• Updating standard lease templates;
• Establishing renewal tracking systems;
• Digitising tenancy records;
• Reviewing security deposit structures;
• Clarifying maintenance obligations;
• Implementing internal compliance protocols;
• Monitoring state-specific tenancy legislation.

As more states move towards modern tenancy regulation, proactive compliance planning will become increasingly important.

Conclusion

India’s tenancy framework is undergoing a gradual but significant transformation. The shift from informal arrangements to documented, technology-enabled, and compliance-driven leasing reflects broader efforts to modernise the country’s real estate ecosystem.

While implementation continues to vary across states, the principles embodied in the Model Tenancy Act represent a clear policy direction towards transparency, predictability, and efficient dispute resolution.

For landlords, tenants, institutional investors, and commercial occupiers, the future of leasing in India is likely to be increasingly digital, documentation-driven, and regulated through specialised mechanisms designed to reduce disputes and improve market confidence.

The success of these reforms will ultimately depend upon the extent of state-level adoption, the effectiveness of digital implementation, and the willingness of market participants to embrace a more formal and compliance-oriented rental ecosystem.

Last Updated on 18 June, 2026