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Laws of the co-operative housing societies and the upcoming policy changes

Jun , 22
Laws of the co-operative housing societies and the upcoming policy changes

There are unique housing cooperative societies ownership models wherein members of the community manage the operations and finances of the society. Co-operative housing societies which are a part of the National Co-operative Housing Federation of India (NCHFI) do abide by the model by-laws. Based on the Multistate Co-operative Societies Act 2002, these by-laws help regulate the formation and responsibilities of the cooperative society and the members of the society. The Co-operative Society Acts of the respective states or the Co-operative Society Act 1912 govern the other cooperative societies. As per the purview of this act, these societies have the freedom to define their own rules. Quite often, the Central Government sanctions some land laws after which it is adopted by the states after making required changes. A policy named ‘Housing for all by 2022’ was introduced by the government in order to solve the deficit of housing facilities for the citizens. 

In order to properly implement the policy of “Housing for all by 2022”, the old tenancy laws have to be looked into and required amendments have to be made. In this regard, the government also has been focusing on promoting rental opportunities for tenants. 

The Model Tenancy Act 2020 (MTA) has also brought remedies and considerable changes in order to ease us renting for tenants which will also help mitigate the drawbacks of the Rent Control Act 1948. There is a slew of legal provisions in the rental laws of existing states which makes the litigation process really cumbersome in resolving disputes.  Also putting a limit/cap on the rent has dissuaded homeowners because of low rental yields. Also, it is difficult for low-income households to afford to own a house and hence it is important to promote rental housing.

Certain new laws have been introduced by the government through the Model Tenancy Act 2020 for housing cooperative societies. The new laws were first drafted in 2015, then it was reintroduced in 2019 and later it was open for public suggestion till December 2020. 

As such, there were no changes made in cooperative society laws when the Model Tenancy Act was reintroduced. 

Let us look at some laws (based on tenant-landowner relationship) that govern housing co-operative societies:

  1. As per MTA, a person can let or take a premise on rent only if an agreement in writing is formulated in writing, which is informed to the rent authority by the landlord and tenant jointly in the form specified under the MTA. This should be done within 2 months from the date of the tenancy agreement. Once this is done, the rent authority must provide a unique identification number to the parties and upload the details of the tenancy on the official website in the local vernacular language or the language of the State / Union territory.
  2. There is a security deposit cap imposed by MTA for residential premises which are payable by the tenant to the house owner with a maximum of two months. 
  3. A property manager is the one who manages the premise of a house and who represents the landowner. He is the one who is responsible to keep the property intact and immaculate.
  4. Also, it is necessary for a landowner to disclose the property manager’s details to the tenant which shall bring clarity and accountability to the process.
  5. Section 19 of the draft MTA, defines the property manager’s responsibilities, which includes a collection of rent, maintenance of the property, etc.
  6. A 3-tier grievance redressal mechanism introduced by the MTA consists of a Rent Authority, Rent Court and Rent Tribunal. Any rented property dispute that arises can be tackled by this grievance redressal mechanism. 

Hence, the Model Tenancy Act 2020 (MTA) is a very beneficial law and is a boon for the co-operative housing society residents. The MTA would bolster the tenancy laws in the country and will create a balance in the rental and housing market. 

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