Housing Minister Shri. Prakash Mehta has announced that the Maharashtra Government will amend the Maharashtra Rent Control Act, 1999.
Reports indicate that the amendment will make tenants of residential flats over 847 sq. ft. and commercial establishments over 500 sq. ft. “pay the prevailing market rent”, which can be done only by removing such premises from the purview of the present Rent Control Act.
Reports further indicate that the State Government claims to be moving towards the draft Model Tenancy Act, 2015 (prepared by the Union Government), starting with the proposed amendment. The draft Model Tenancy Act, 2015 (Download it here to see for yourself) spells the end of rent control altogether and would lead to mass dis-housing of huge numbers of tenants across the city and the state.
However, it is to be noted that the Model Act does not call for discrimination between tenants on the basis of size of their premises, as presently announced by the Housing Minister. Further, it appears that the analysis done by the Govt. is focused solely on cessed buildings which exist only in the Island City, completely ignoring the fact that the Rent Control Act covers the entire city of Mumbai and whole of the Maharashtra.
What, then, is the Government’s motive?
In May 2015, the Maharashtra Government, through Housing Minister Shri. Prakash Mehta, circulated the Draft Housing Policy for the State to MPs, MLAs and MLCs. The Draft Policy proposed an amendment to the Rent Act which would have excluded all commercial establishments over 500 sq. ft. and residential flats over 860 sq. ft. from rent control and imposed income based caps to the rent payable by those tenants.
The Draft Policy stated that “one of the key factors leading to the dilapidation of old and cessed building is the provisions of the” Maharashtra Rent Control Act. In light of this observation, the object of the proposed amendment was ostensibly to incentivise “landlords to maintain and preserve the building given on rent”. Then too the focus was on the old and cessed buildings in the Island City, and not the rest of the City and the State.
Following public outcry by tenant organizations and others, including the Action Committee, the State Government withdraw the section of the Draft Policy which proposed an amendment to the Rent Act. Tenants were assured that the State Government and the BJP would take no action prejudicial to their interests. The Chief Minister’s Office issued a press statement to this effect.
The State Government is now going back on its commitment.
Even worse – the State Government has, announced a far more draconian amendment to the Rent Act, for a completely unrelated reason. Whereas the earlier amendment linked the rent to the income of the tenant and capped the rent at 30 % of the tenants income, the present amendment has no upper limit to the rent payable. Most significantly, the current announced amendment is aimed at the same tenanted premises as the amendment proposed 8 months ago.
Judged by the stated objective of the amendment proposed last year by the Housing Policy contrasted with the stated objective of the present amendment, is the real intention to somehow or the other oust tenants from their homes and businesses and handover buildings to a small clutch of privileged property owners/landlords and developers?
Focus on the Island City
It is pertinent to note that the Government is also in the process of amending the Development Plan (DP) and Development Control Regulations (DCR) for Mumbai and will likely steeply increase FSI. Once rent controlled buildings have been vacated, their owners, along with developers, will reap a mind boggling bonanza through redevelopment.
The Mumbai Port Trust (under the control of the Union Ministry of Shipping) is the biggest landlord in the Island City and is evicting its tenants en masse. Government controlled companies own a number of tenanted properties in the Island City and their power to evict tenants has been strengthened by the recent amendment to the The Public Premises (Eviction of Unauthorised Occupants) Act, 1971. The announced amendment to the Rent Act and the move towards Draft Model Tenancy Act, 2015 read along with these, paint a dismal picture:
Are these unrelated independent developments?
Or, is a coordinated attempt being made to empty the Island City of a large number of its long term inhabitants, to make way for redevelopment by builders and property owners/landlords, who will profit to the tune of tens of thousands of crores at the cost of lakhs of tenants, most of whom will be totally ruined?
The End of Rent Control
Be that as it may, the amendment picks 500 sq. ft. and 847 sq. ft. as the limits for rent control. Tenants will be divided as also landlords will be divided.
Tomorrow, the Government may well 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 Maharashtra Rent Control 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 Control Act altogether.
An Unjust Bonanza to Landlords and Developers
The amendment and the draft Model Tenancy Act, 2015, would give an enormous bonanza, of tens if not hundreds of thousands of crores, to landlords and developers.
This, when the Government is well aware 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.” –[Statement of Objects and Reasons of Maharashtra Act No. VIII of 1998, passed when the NDA was in power in Maharashtra]