Residential Premises over 861 sq. feet and Commercial Premises over 500 sq. feet to pay Market Rent or Vacate

The Draft Housing Policy of the Maharashtra Government states that the Govt. has decided to amend the Maharashtra Rent Control Act, 1999 and dis-house lakhs of residential and commercial tenants. If you are a tenant occupying commercial premises over 46.5 sq. metres or residential premises over 80 sq. metres you will immediately have to pay market value rent or vacate your premises.

The Draft Policy says that this will happen in the next three months. Necessary amendments to the Act will be introduced in the Legislative Assembly in the monsoon session. Given the majority that the Govt. enjoys, this proposal will certainly become law.

This amendment will ruin the lives of lakhs of residential tenants, who will lose their homes and commercial tenants who will lose their livelihoods. The Pugree paid by tenants to obtain their premises from their landlords will count for nothing and will evaporate.

WHO WILL BENEFIT?

A group of landlords owning such premises will make a windfall profits running into lakhs of crores. The Govt. passed Maharashtra Act No. VIII of 1998, which extended the provisions of the old Bombay Rent Act for a year. The Statement of Objects and Reasons of that Act says:

“It is also pertinent to note that the landlords as a class have made enormous gains because a substantial number of tenancies have been transferred at a premium or “Pugree” and also by utilizing extra floor space index, by change of user of the tenements and by sale of development rights. Many landlords have benefited many times over their original investments. … Substantial parts of land are given on leasehold by public or local authorities to the landowners for long periods of time at very low rents. Escalating land prices in computing the escalation of standard rent could not be either just or reasonable and would unjustly enrich the landlords as a class.”

In 1998 Govt. was aware that landlords as a class had already made enormous gains despite rent control. Today, the same Govt. wants to massively enrich a section of landlords at the expense of lakhs of tenants.

The 1999 Act had an all-party consensus that there should be no exemptions from rent control based on the size of the premises, which has also been the stand of successive Govts. in the pending Constitutional challenge to the 1999 Act.

Now, out of the blue, with not even a whisper of discussion and under questionable circumstances the Govt. intends to gift a group of landlords/builders property worth lakhs of crores, ruining the lives of lakhs of tenants. The amendment refers to a cap on the rent payable after the fourth year of 30% of the income of the tenant. However, if a tenant cannot afford 50% of the market rent for the first three years he will be dis-housed in any case! Regardless, in these days of constant inflation, nobody can afford to pay 30% of his/her income for rent, especially after having paid market value Pugree to acquire the premises.

The amendment will also remove tenanted buildings subject to cess from the provisions of the MHADA Act permanently taking away your right to acquire your premises from your landlord under MHADA, (on payment of a compensation of 100 months rent). This is one more unjust and unfair gift that will be given to landlords.

THE END OF RENT CONTROL COMING?

This amendment would be the first step on the road to the end of rent control altogether – not just for those affected by the amendment, but for all protected tenants in Mumbai and Maharashtra.

The amendment picks 46.5 and 80 sq. metres as the limits for rent control – in order to favor a select group of builders/property owners. Tenants will be divided as also landlords will be divided.

Tomorrow, the Government will lower the limits further, dis-housing more and more tenants in the process.

The amendment will also destroy the defense of the Government and the tenants in the Constitutional challenge to the Rent Act by the powerful Property Owners Association which is pending before a nine judge bench of the Supreme Court. This may well result in the Supreme Court striking down the Maharashtra Rent Act altogether. 

THE OBJECT OF THIS AMENDMENT

According to the Draft Housing Policy, the freezing of rents under the Rent Act is “one of the key factors leading to dilapidation of old and cessed buildings.” The Policy indicates that this amendment is made with a view to incentivize landlords “to maintain and preserve buildings”.

This stated object does not stand up to scrutiny.

In fact, it is buildings with smaller premises and non-cessed buildings that are dilapidated and collapsing due to non-maintenance and neglect. Buildings with larger premises, which the amendment targets, are generally structurally sound & not dilapidated under the present repairs framework.

Structural repairs of cessed buildings are the responsibility of the Repair Board under MHADA, for which all tenants of cessed buildings pay a Repair Cess (collected along with Property Tax by the Municipal Corporation). Landlords are relieved of the responsibility of structural repairs of these buildings.

Instead of addressing the serious issue of dilapidation of non-cessed buildings  and buildings with smaller premises(both of which the policy is silent on), the amendment instead gifts landlords property worth lakhs of crores under guise of providing for maintenance and repairs.

The Chief Minister has said that the housing policy “is a draft policy” and has not yet gone to the Cabinet. The Chief Minister invited suggestions and changes to the policy and said “tell us the facts, convince us, and we will change it.” It appears from this statement that the Govt. intends to amend the Rent Act unless and until they are convinced otherwise.

Public awareness of this proposal is still very low. And time is very short. This information must be widely circulated amongst all tenants, even those not immediately affected today.

All tenants should immediately meet their MLAs and ask them to oppose this amendment.

The Action Committee has sought meetings with the Housing Minister and the Chief Minister to request their urgent intervention in the matter. Depending on the outcome of these meetings, the Action Committee will decide the future course of action.

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One thought on “Residential Premises over 861 sq. feet and Commercial Premises over 500 sq. feet to pay Market Rent or Vacate

  1. Sir I am a senior citizen staying on Marine Drive.
    i have gone through your representation and i feel the following points have been missed out and should be highlighted.
    1) About 95 % of the tenanted buildings are built prior to 1955 that means before 60 years.
    most of the tenants are not financially in position to purchase this flats. The have got this flats inheritance. Few who have purchased subsequently have paid substantial money for transfer to landlords (pugree).

    2) In Marine Drive their are about only 20 buildings are tenanted buildings and all are built prior to 1950. Even in this buildings quite a lot of flats are owned by landlords. More than 90% of tenants have acquired flats in inheritance. Marine drive CANNOT be the bench mark to the amendment to Rent Act.

    Like

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