17 November, 2023    

The Union Cabinet's Green Light: Key Highlights of the Tenancy Framework for Union Territories

The Union Cabinet recently approved tenancy regulations for three Union Territories - Andaman and Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu, and Lakshadweep. This is a major step towards providing a robust legal framework for the rental housing market in these regions.

As a leading property management company in India, Agarwal Estates believes these new Tenancy Regulations will bring tremendous benefits for both tenants and landlords in the Union Territories. Here are some of the key highlights of these regulations:

Formalisation of Rental Agreements

The tenancy regulations mandate entering into proper rental agreements between tenants and landlords for leasing any residential or commercial property. This agreement clearly defines the rights and responsibilities of both parties. Having a formal agreement brings clarity to the tenancy terms and minimizes disputes.

Regulation of Security Deposits

The regulations cap the security deposit at a maximum of two months’ rent for residential premises and six months for commercial premises. This ensures tenants do not end up paying excessive deposits. Reasonable security deposits make renting more affordable.

Establishment of Rent Authorities

The tenancy regulations provide for the setting up of Rent Authorities and Rent Tribunals to serve as a mechanism for resolving disputes between tenants and landlords. Having access to these authorities will allow quick resolution of conflicts without having to go to court. The legal framework can give favourable results.

Balancing of Interests

A key objective of these Tenancy Regulations is balancing the rights and interests of both property owners and tenants. This is essential for creating a fair, transparent and accountable ecosystem for the rental housing market.

Filling the Regulatory Gap

Currently, there needs to be a clear regulation governing rental housing in these Union Territories. The new regulations fill this gap by providing a much-needed legal framework. This will attract more investment in rental housing.

Unlocking Vacant Houses

Lack of protections often deters homeowners from renting out vacant houses. The tenancy regulations, by safeguarding the interests of landlords, will help unlock a large inventory of vacant homes for rental housing.

Supporting Tenant Mobility

The regulations make it simpler for tenants to vacate rented premises and move to another location if required. This makes the rental market more dynamic.

Current State of Tenancy Regulations

While the Model Tenancy Act was approved for circulation to States and Union Territories, only a few have adopted the law. Presently, just four states have integrated the Act, emphasizing the need for broader adoption across the nation.

State Adoption and Impact

Assam, Uttar Pradesh, Tamil Nadu, and Andhra Pradesh have embraced the Model Tenancy Act to varying degrees. This Act aims to strike a balance between the rights of tenants and landlords. However, its adoption remains slow in most states despite its potential to unlock vacant premises and stimulate a vibrant rental market.

Insights from the Ministry

The Ministry of Housing and Urban Affairs has been actively advocating for the adoption of the Model Tenancy Act. The Act, if implemented comprehensively, can significantly impact the housing sector, providing transparency and legal structure.

Key Features of the Model Tenancy Act

The Act stipulates the signing of a rental agreement specifying the tenancy period, agreed-upon rent, and a capped security deposit. These agreements are to be submitted for approval to the rent authorities. It also introduces rent courts and tribunals for dispute resolution, providing a structured mechanism for conflict resolution.

Promoting Private Investment

The regulations will build confidence among investors to fund the development of rental housing across these regions. More investment will expand the rental housing stock.


Overall, these progressive Tenancy Regulations will have a transformative impact on the rental housing market in Andaman and Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu, and Lakshadweep. By balancing the rights of tenants and landlords, it will help deepen the rental housing market. More availability of rental homes will support the housing needs of students, working professionals, migrants and low and middle-income families in these regions.

Agarwal Estates works in the best interests of both tenants and landlords. We aim to create a win-win ecosystem that balances the rights of property owners and renters. Our perspectives come from this objective of enabling a fair, transparent and accountable rental housing market.

As thought leaders in Indian real estate, Agarwal Estates will continue to provide insightful perspectives on major policy reforms concerning real estate and rental housing. Stay tuned for more updates!

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