Tenancy Act given more teeth and muscle

One of the biggest complaints against the Tenancy Act 2004 was the lack of an effective redressal system and penalties when provisions of the Act were violated either by the landlord or the tenant. The complaint also was that no single agency from the MoWHS to the local governments implemented the Act or took accountability for it. The new Tenancy Bill 2014 with multiple amendments addresses all these concerns at least on paper for now.

In the case of tenants the general complaint was landlords increasing the rent unreasonably while in the case of landlords the complaints would be refusal of tenants to vacate property or damage of property.

Now if landlords increase the rent prior to two years and do it so by more than 10 percent then the landlord will have to pay a fine of two months’ rent and also refund the excess amount.

The Bill also lays’ out that a tenancy agreement will have to executed in three original copies of which copies are retained by one party each and copy would be submitted to the relevant local authority.

The rental agreement will have to be executed before the tenant occupies the building. Failure to draw up an agreement or submit copies will result in fines as per the rules and regulations. On the other hand if the landowner refuses to draw up an agreement the tenant has to apply to the local dispute settlement committee to draw up the agreement and failure to do so will also result in a fine on the tenant.

If a tenant fails to pay the rent on time he shall pay an amount with the interest rate of 15 percent per annum. An owner who fails to refund the security deposit of the tenant will have to pay compensation at the rate of 15 percent per annum on the deposit.

A party that fails to answer summons of the dispute settlement committee shall be liable to a fine equivalent to one months’ rent.

If a tenant fails to pay rental dues as required by the committee then they would be liable to pay an interest of 24 percent per annum on the rent. It would similarly apply to owners in case of fines.

The tenancy agreement may allow the owner to terminate the tenancy in accordance with the act and the rental agreement drawn up between the owner and the tenant.

The Bill has also streamlined and detailed the creation of various dispute resolution committees with specific powers and functions.

The Bill details the creation of a Dzongkhag Dispute Resolution Committee at the Dzongkhag level composed of two civil servants, two elected officials and the Dzongda, a Dzongkhag Thromde Dispute Settlement Committee composing of two civil servants, two elected members and the Executive Secretary and finally a Gewog dispute settlement committee with the Gup, Mangmi and a civil servant. The elected representative of a Yenlag Thromde shall also be the de facto member of the Geowg dispute committee.

The Dispute Settlement Committee on application by a tenant or owner can summon people, restrain any action that breaches the tenancy agreement, order payment of money or compensation, impose fines, order payment of rent to the committee until the agreement has been performed, order tenants or owners to comply with the Act, order possession of premises on it being abandoned, order an injunction or interim order, provide decisions for non-appearance of a party and any ancillary orders that the Chairperson sees fit.

The committee can investigate a tenancy dispute, obtain evidence, documents or information in relation to the matter before it and can require officials from the local government to enter any premises at any reasonable time with consent of the parties or upon production of a court warrant.

The members of the committee would be immune from prosecution for any act or decisions made by them in good faith in the exercise of their functions except for acts of corruption.

The Bill sets up a Tenancy Authority which will be a department under the Ministry of Works and Human Settlement.

The Authority will frame rules and regulates, coordinate, assess and monitor the implementation of the Act, ensure timely adjudication of tenancy disputes being carried out by local governments, establish an online compliant and tenancy advisory service and require local governments to submit reports on tenancy issues.

The Dzongkhag, Gewog and Dzongkhag Thromdes will be responsible for the administration of this Act, establish web based complaints system, undertake investigation and research matters on tenancy issues, receive complaints and refer them to the dispute settlement committees, establish a dispute settlement committee, create awareness and sue for enforcement of the committees decisions and for recovery of fines and penalties before the court.

The Bill will be introduced on 23rd May 2014 in the National Assembly by Lyonpo Dorji Choden of the Ministry of Works and Human Settlement.

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