This act has been introduced so as to ensure rents at market rates. This act is being prepared by the Housing Ministry which is intended to replace archaic rent control legislations that capped rentals, resulting in landlords getting a pittance for properties in prime localities in metros.

The legislation which is yet to be adopted by the state- once this law comes into force in case of tenancies entered after notification- the rental will be based on an agreement between the landlord and the tenant.

For existing ones, even those whose rents were finalized years ago, there will be a freeze on revision for 24 months. In the 22^nd month, the landlord will be able to seek a revision. And in the absence of such an agreement the landlord will have the option to terminate the tenancy.

Though rent control is a state subject, the Centre is seeking adoption of the Model Law by mandating that only states that enact this law would be eligible for funding under the flagship Rajiv Awas Yojana that has a budgetary allocation of Rs.800 crore in 2011-12 and comes with other benefits such as interest relief.

It is of the opinion by the Centre that the existing law has discouraged the landlords from re-investing in their properties as the rentals have been kept artificially low. Through this act the rental is being increased whereby the landlords will be ready to lend out their property for rental and ease the deficient supply of dwellings. The ministry is drawing inspiration from the Jawarhlal  Nehru  Urban Renewal Mission that got several states to repeal the Urban Land Ceiling and regulation Act(ULCRA). And also to protect the interests of the tenants it is necessary to put a check against arbitrary rise in rents and the rents will be based on the agreement entered by both the parties. Moreover a notice of three months has to be served upon the tenant about the increase of the rent.

In case if the tenant is not ready to accept the rent which is so revised then it has to be specifically mentioned or else it would be deemed as if the new terms have been accepted by the tenant.  For settling the disputes, the model law prescribes the disputes to be forwarded to the Rent Tribunal to revise or fix the rent.