May 13, 2020: R Ashoka, a revenue minister in Karnataka stated that landlords cannot collect rent from tenants during the lockdown. He said action would be taken against landlords if they force tenants to vacate property due to non-payment of rent.
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“In such a situation, extreme action can be taken against the house owners and they may be jailed for up to one year under the Disaster Management Authority,” he said.
He, however, did not elucidate if the order was meant only for tenants belonging to the economically weaker strata or to people across society.
As per online real estate platform Nobroker.com, Bengaluru has 2.9 million houses on rent, which includes apartment flats, small gated societies and standalone houses. According to an estimate, these properties generate about Rs 4,060 crore of rent per month.
“Any change in regulation will impact this massive amount of rental amount the city pays and receives,” said Amit Agarwal, CEO at NoBroker.com.
Though the relationship between a tenant and an owner comes under the Karnataka Rent Control Act, 2001, the government can issue an amendment or ordinance under the Act to chart out directions with respect to the collection of rent and eviction of premises.
According to tax experts, the fiat can be challenged in court. “In my opinion, using the powers under the National Disaster Management Act for rent-related disputes will be amenable to challenge before the high court or Supreme Court,” said Ashish K Singh, managing partner of law firm Capstone Legal. “It is clear that the mandate of NDMA does not cover the relationship between landlord and tenant.”
The state government has taken indication from Singapore that has passed the Covid-19 (Temporary Measures) Act 2020, which allows a tenant who is unable to pay rent and other dues under commercial leases to seek a temporary relief from rental payment obligations for six months.
According to property brokers, several potential home buyers have postponed their plans to buy property, which has pushed up the demand for rented homes in Bengaluru.
A softening of prices and home loan rates is expected by potential home-buyers.
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