Charging rent for shops
Vaibhav vida
(Querist) 23 February 2013
This query is : Resolved
Hi,
My father owns 7 shops. these shops have been rented out since 1986. The initial price was 400 rs however it has been increase through verbal agreement in the following years: 2002 - 500 rs, 2007 - 600 rs 2012 700 rs. The rental agreement was only signed in the first year which states it is valid for 11 months. My father wants to increase it to 1000 rs. this year but the rentee's have refused as the original rent agreement did not state that the rent would be increased. what is the law around this, can we set a new agreement with the increased rent price now? or can we ask them to leave the shops? what are the options available?
ajay sethi
(Expert) 23 February 2013
increase it by 10% every 3 years as per supreme court judgement
ajay sethi
(Expert) 23 February 2013
upreme Court's model rent agreement assures tenant 5 yrs' stay
Dhananjay Mahapatra May 15, 2011, 01.57am IST
(It asked the tenants to pay…)
NEW DELHI: The Supreme Court has drafted a model landlord-tenant agreement promising tenants five years of peaceful stay in the premises if they give rent at market rate, increase it by 10% every three years and pay the property tax for the house.
It asked the tenants to pay up every charge accrued on the house to enable the landlord get the rentals without any deduction.
"If the present and prevalent market rent assessed and fixed between the parties is paid by the tenant, the landlord shall not be entitled to bring any action for his eviction against such a tenant at least for a period of five years.
Thus, for five years the tenant shall enjoy immunity from being evicted from the premises," the court said. The court realized that in most landlord-tenant disputes, there were no written contracts and the tenants took advantage of the situation because of the slow process of rent control laws and the judicial process involved in eviction.
The court said adherence to these guidelines could considerably bring down litigation. This judgment would not affect the tenancy governed by existing lease deeds or specific contracts between the landlord and tenant.
It found tenants occupying the property by paying rent at a rate determined 20-25 years ago, and said half of the landlord-tenant disputes would not have reached the courts if the tenants agreed to pay rent at market rate.
Writing from personal and judicial experience, the court said: "We deem it our duty and obligation to fix some guidelines and norms for such type of litigation, so as to minimize the landlord-tenant litigation at all levels."
It said: "The tenant must enhance the rent according to the terms of the agreement or at least by 10% after every three years. If the rent is too low in comparison to the market rent having been fixed almost 20 to 25 years back, then the present market rate should be worked out."
It should be determined either on the basis of valuation report or reliable estimates of building rentals in surrounding areas let out recently, said Justice Bhandari, who authored the judgment for the bench.
"The rent should be just, proper and adequate and be fixed keeping in mind the location of the property, type of construction, accessibility with the main road, availability of parking space. Care should be taken that it does not end up being a bonanza for the landlord," it said.
"Apart from the rentals, property tax, water tax, maintenance charges, electricity charges for the actual consumption of the tenanted premises and for common area shall be payable by the tenant only so that the landlord gets the actual rent out of which nothing should be deductible," he said.
"In case there is enhancement in property tax, water tax or maintenance charges, electricity charges then the same shall also be borne by the tenant only," the bench said.
Vaibhav vida
(Querist) 23 February 2013
Thanks Ajay!, one more question - who decides what is fair market rate? is there a govt body that can confirm the market rate is fair for that area or is this based on the average rates identified in surrounding area by the landlord?
