Model Tenancy Law
The approval of the Model Tenancy Law by the Union Cabinet has been hailed as a watershed moment in Indian real estate. In one of the most significant changes to the industry, investors cannot rent properties without a written contract.
The Model Tenancy Law aims to enhance landlords’ confidence in renting vacant properties to NRI investors. Having legal clauses binding their tenants is comforting for NRI investors. Furthermore, the act specifies the time frame for resolving any rental disputes.
Also provided for in the new law is a digital platform for submitting rental agreements to the rent authority in the future. For NRI landlords, digital infrastructure is more convenient and adds a layer of transparency. With the passage of this Act, there is now a clear division of responsibilities between a tenant and a landlord.
NRIs have always expressed a strong desire to invest in Indian real estate. However, the uncertainties surrounding ensuring that tenants uphold the terms and conditions of the rental agreements have been significantly high for NRIs thus far. In India, the entire process of finding a tenant and collecting the rent would usually take place by family or close associates.
As the rental market becomes more organised, institutional service providers will enter the market to meet market demands. The resulting increased trust and confidence will allow NRIs to easily monetize their existing vacant residential properties by letting them out in a coherent, cohesive, and easily manageable manner.
Ready-to-move inventories have seen significant traction in India’s prime residential markets over the last two quarters. The new regulatory framework will further boost this demand. Prices for RTMI properties are likely to rise soon following the Model Tenancy Act’s implementation.
A report by ANAROCK
A report by ANAROCK research suggests that over 4.22 lakh homes need to be built by the end of 2021. It’s worth noting that only 28% of these homes are still unsold as of today. Based on the growing demand for ready-to-move-in homes, developers will continue to be mindful of meeting delivery deadlines despite the impact of the pandemic’s second wave, which is already showing signs of abating.
The majority of these near-completion units are in the mid-range and low-cost segments. 40% of the stock price falls under INR 40 lakhs, and 35% falls between INR 40 and INR 80 lakhs.
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Low interest rates and favorable currency rates make it an ideal time to invest in income-producing residential properties. Property prices continue to be range-bound, and developer offers and discounts are still available to serious buyers.
NRI investors can invest in Indian real estate to generate long-term rental income as the Government restructures and strenghtens regulations.