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Rent hike should be linked to the price index: Praveen Khandelwal

IBNLive.com
Jul 09, 2013 at 04:26pm IST

The Delhi Rent Act, hanging in a limbo for the last 18 years, will influence rental laws across the country. So what can be a win-win situation for both the landlord and the tenant? Confederation of All India Traders' secretary general Praveen Khandelwal joined IBNLive readers on the need for a balanced law on rentals.

Q. In all the major cities in India the rent rates are inflated by brokers. Will there be any regulation for such brokers in the act? Asked by: Sudhakar

Rent hike should be linked to the price index: Praveen Khandelwal

CAIT's secretary general Praveen Khandelwal joined IBNLive readers on the need for a balanced law on rentals.

A. It is not only the brokers but others too. However, we have demanded the formation of a Real Estate Regulatory Authority to regulate the real estate issues including rent and brokers etc needs to get registration with the said Authority.

Q. What is The Delhi Rent Act is all about? Asked by: Baba

A. Delhi Rent Act or Rent Act of any State deals with the issue of regulations of Rent in the particular State as also deals with other incidental issues.

Q. In India 70 percent of renting areas is though un-organised sector in that case how the act can effectively regulate it and who are benefiters? Asked by: Baba

A. This is purely because of the poor planning of the Government and no effective implementation of the law by the respective Government Agencies. For any Act to have salutary effect, it is necessary for the Government to consult the stakeholders before framing any law and has to look the ground realities and should need to carry out an in depth study, only then we can expect effective regulations of the laws.

Q. There is something called Ridiculous rent and something called Fair rent. I am sure, both the tenant and landlord know what is ridiculous and what is fair. Like dearness allowance and inflation, Rent also should be subjected to compulsory revision after every three years. You can't have archaic laws as excuse for paying less rent. Asked by: S ESHWAR

A. At present, under Delhi Rent Act with amendment in 1988, the rent is revised to 10% in every three years yet we feel that a suitable formula needs to evolve in consultation with stakeholders to ensure fair rent for the landlords but of course keeping into consideration the factual position.

Q. How would the Rent Act balance the demands of the tenants with those of the landlords especially when the landlords are lobbying for increasing rents manifolds? Asked by: abc123

A. Suitable provisions needs to be incorporated in the law and the basic fundamental of "Need not Greed" should be followed, the situation will certainly improve but we have to take a balanced view to understand the position of the tenants as well.

Q. The owners most of them go in for an eleven month agreement and renew it every time. Such continuous renewals can be considered as a long term lease? Asked by: sundar1950in

A. If a suitable and effective law is made and its effective implementation is monitored on regular basis, it can be converted even on long lease.

Q. The rental laws are state subjects. Do they differ from state to star? I understand Mumbai has better rights conferred to the owner. Is it true? Asked by: sundar1950in

A. Of course, the land and building are the State subject and therefore State government has a right to frame law on these subjects but in Delhi land and building is under the domain of Central government and as such the Central government frame laws for Delhi. There is no question of betterment of any section. The crux of the matter is "balanced act" which takes due care of each stakeholder.

Q. Will there be any regulatory in Mumbai as well? Asked by: Ankur

A. So far to the best of my knowledge no such regulator works in any part of the Country. But yes, keeping into consideration the multiple problems, there has to be Regulatory Authority in real estate sector, only then we can think of reforms in real estate.

Q. How would the Rent Act balance the demands of the tenants with those of the landlords especially when the landlords are lobbying for increasing rents manifolds? Asked by: abc123

A. As replied earlier, serious consultation with each stakeholder is needed to understand their view point and their governing position and circumstances. Based on such study, a balanced act can be drawn which may take care of interests of one and all.

Q. The house owner is harassed after occupation by a tenant who refuses to leave and also does not agree for increase in rent. Is owning a house wrong investment? Asked by: sundar1950in

A. This is purely because of absence of an effective law and its strict implementation. Government needs to take this issue on its highest priority since there is acute shortage of dwelling units across the Country. We should call upon the Government to look in to the issue.

Q. Will this kind of act be helpful for the people who are living on rent? Or there will be many loopholes resulting in the escape route for the house owners and can we expect the government fixing the rent amount depending upon the area? Asked by: Ankur

A. As per media reports, the Government is contemplating to draw a fresh law. During the process of framing the law, the Authorities must study the difficulties faced by each section since Independence and need to have brain storming to evolve certain kind of mechanism so that an atmosphere of mutual trust be created between landlords and tenants. Fixing rent depending upon the area is a question which needs a greater debate.

Q. The lease agreement in many cases put actual rent as a small amount and provision of amenities as a larger one. Does such split work to advantage of tenant or owner? Asked by: sundar1950in

A. It is certainly not to the advantage of any one. As I said earlier, the ground realities of the issue forms a focal point on the basis of which the Rent Act has to be framed. Unless and until the Authorities do not take due cognizance of the importance of the issue, nothing much can be achieved. Casual attitude towards this issue needs to be thrown out.

Q. Most of Real estate agents (brokers) charge one month rent as fee from both landlord and the tenant. It is unreasonable. Will Delhi rent act be useful to control this practice? Asked by: Manicandan

A. The new law which the Government seems to be contemplating should incorporate such provision to stop this kind of act but a reasonable commission should be given to the broker for his services. The modalities of the commission can be spelled out in the law

Q. What is the possibility of the current rental situation to get address in terms of a law? Asked by: Narendra

A. Presently, the Delhi Rent Act, 1958 amended in 1988 is in operation. If Government takes this matter seriously, the rental situation can be addressed well in the new law.

Q. There are many societies which don't allow the bachelors to live alone. How can this problem be solved? If no one will allow bachelors to get flat then where will they go? Asked by: Gunjan

A. Lol. Certainly a good question. Since Societies are independent, they can't be forced. But yes, the Government should construct Hostels or Paying Guest Accommodations to address this genuine problem.

Q. In a place like Gurgaon, it is impossible to find a rental accommodation without the help of brokers. It is usually these brokers who inflate the rents in any area in greed for higher brokerage. Can there be a law to get these brokers into the ambit? Asked by: Karthik

A. Already said earlier a Real Estate Regulatory Authority should be constituted and it will have to be making mandatory for each broker to obtain registration with the Authority and within the Authority there should be a Brokers Cell to monitor exclusively the working of brokers.

Q. Don't you think 10% hike in the rent for subsequent years is bit too much? Asked by: Rohit

A. The hike in rent should be linked with price index, and then there will not be any problem.

Q. Why the agreement is based on 11 months. why it can't be 12 months i.e. a year? Which is easier to maintain? Asked by: Rakka

A. Why not be more than 12 months? It is for the convenience but some yardstick may be drawn for the tenancy period.

Q. There is no limit to the rent asked by the landlords. Cant there be a law by government, which fixes the rent depending upon the area? Asked by: Manoj

A. It is a question which will have right answer in the law which is supposed to be framed by the Government.

Q. What does the future hold for the areas like Chandni Chowk / Old Delhi. Places such like these need complete re- building in a well planned manner over a period of time. Will ever we have a well developed and planned city at par with international standards? Asked by: Amil

A. Of course why not but for that the traders organisations and the RWAs needs to be taken into confidence. Before starting any redevelopment, they should be well placed at some other place so that their trade may not be affected and it needs to be done in phases. When one phase becomes complete, the traders should be handover the developed area and for next phase other traders should we placed elsewhere and likewise.

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