India’s rental housing market has long suffered from outdated laws, slow dispute resolution, low rental yields, and limited protection for both tenants and landlords. The New Rent Act 2025, expected to be adopted by multiple states, aims to modernise rental rules, improve transparency, and promote formal rental housing across urban India. This article explains the major provisions, what changes for tenants and landlords, and how the Act impacts financial planning.
Why a New Rent Law Was Needed
India’s older rent control laws, some dating to the 1940s, had several issues
• Extremely low rent increases discouraged landlords from renting out properties
• Long legal disputes created uncertainty
• Limited rights and clarity for both parties
• Lack of digital systems for agreements and deposits
With urban migration rising, the government aims to unlock millions of vacant homes and make renting safer and simpler.
Key Features of the New Rent Act 2025
The new Act is based on the Model Tenancy Act but updated for clarity and digital adoption.
1. Mandatory Written Agreements
All rentals must have a written agreement specifying
• rent amount
• security deposit
• duration
• responsibilities for repairs
• notice periods
This prevents verbal misunderstandings and ensures enforceability.
2. Security Deposit Limits
To avoid excessive upfront payments, the Act sets clear caps
• Residential property: maximum 2–3 months’ rent
• Commercial property: up to 6 months’ rent
This reduces the financial burden on tenants and brings national uniformity.
3. Digital Registration and Rent Authority
A digital Rent Authority platform will be created for
• online registration of agreements
• upload of documents
• rent dispute filings
• tracking case status
This reduces paperwork and speeds up resolution.
4. Time-Bound Dispute Resolution
Special rent courts will resolve disputes faster, typically within 60–90 days.
This ensures that issues like arrears, eviction, or repair disputes are not stuck in litigation for years.
5. Clear Rules on Rent Revision
Landlords must give prior written notice before raising rent.
Typical increases follow the agreement terms, usually 3–5% annually or as negotiated.
6. Responsibilities for Repairs
The Act clearly defines who handles what
• Landlords: structural repairs, major civil work, electrical wiring, plumbing mains
• Tenants: day-to-day maintenance, minor repairs, cleanliness
This reduces conflict and surprise expenses.
7. Eviction Rules Become Transparent
Eviction is allowed only under specific conditions
• non-payment of rent
• misuse or property damage
• expiry of contract
• landlord’s immediate need for property
Tenants receive reasonable notice and protection from arbitrary eviction.
8. Promotion of Formal Rental Housing
By clarifying rights and limiting risks for landlords, the Act encourages more homes to enter the rental market.
This helps address urban housing demand and reduces pressure on buying property.
Impact on Tenants
Tenants benefit through
• transparent rent agreements
• predictable rent hikes
• capped security deposits
• faster resolution of disputes
• legal protection from unfair eviction
This makes renting more affordable and secure, especially for students, migrants, and working professionals.
Impact on Landlords
Landlords gain
• better legal protection
• faster eviction processes for genuine cases
• reduced risk of default
• digital documentation for proof
This increases confidence to rent out unused properties.
Impact on the Housing Market and Investors
Formalizing the rental sector improves real estate investment flows.
• More rental supply reduces price pressure in metros
• Regularized rent increases improve yields
• Institutional rental housing (REITs, co-living) gets regulatory clarity
What Tenants and Landlords Should Do Now
• Shift to written, registered rental agreements
• Move towards digital documentation
• Understand rights and responsibilities before signing
• Avoid verbal or informal rental arrangements
• Plan finances with transparent rental timelines
Takeaways
• The New Rent Act 2025 aims to modernize India’s rental housing system
• It strengthens rights for both tenants and landlords
• Security deposit caps, digital registration, and faster dispute resolution are major improvements
• A more transparent rental market benefits investors and the economy
• Both parties should adopt compliant rental agreements to avoid future disputes
Author
Rajesh Narayanan
Leave a Reply