The Act regulates how much landlords can demand (Img: Internet)
New Delhi: For millions of tenants across India, questions around hefty security deposits are common but the law provides clear boundaries under the Model Tenancy Act, 2021. The Act regulates how much landlords can demand and lays down rules for refund and deductions, aiming to make rental agreements more transparent.
Under the Act, security deposit limits depend on the type of property:
The deposit amount must be mutually agreed upon by both landlord and tenant and clearly mentioned in the tenancy agreement.
The law also specifies that landlords must return the security deposit once the tenant vacates the property, after adjusting any valid dues or damages. The refund must be processed on the date of handover of vacant possession.
In special cases such as natural disasters or other force majeure events—including floods, fires, or earthquakes—if the property becomes uninhabitable and the landlord fails to repair it, the deposit and advance rent must be refunded within 15 days after the notice period ends.
Deductions from the deposit are allowed only under specific conditions. If tenants fail to carry out repairs they are responsible for, landlords can get the work done and recover the cost from the deposit. Tenants are then required to pay any excess amount if repair costs exceed the deposit.
However, tenants also have rights. If a landlord fails to carry out necessary repairs, tenants may undertake the work themselves and deduct the cost from future rent, subject to a limit of 50% of monthly rent in any one month.
The Model Tenancy Act is designed to protect both landlords and tenants by ensuring security deposits are reasonable, refundable, and transparently handled under clear legal provisions.
