Tenancy Act reviewed but to be deliberated in next session

Minister of Work and Human Settlement Dorji Choden presented the report on the review of the Tenancy Act 2004 in the National Assembly yesterday.
A proposal to review and amend the tenancy act 2004 was submitted during the first session of second parliament. Accordingly the National Assembly resolved that the Ministry should carry out consultation with the various agencies, Departments, Corporations and the general public and to report back to the parliament on the review of the act. In keeping with the resolution, the Ministry carried out public consultation meetings in the Thromdes from the west to the east and even hosted a web based discussion forum for about two months for receiving comments.
Minister of MoEA Damchoe Dorji said, “There is a need for a dispute settlement mechanism.”
Minister of MoHCA Norbu Wangchuk said, “It is important to have an agreement between owner and the tenant as I have seen that if the house owner wants to keep their relatives, the owner increases the rent. So I think when this act is implemented this problem might be solved.”
Opposition leader Pema Jamtsho said, “There should be clear idea whether this act is prepared in accordance with social needs or as business needs. This act should benefit house owners in the 20 dzongkhags not only in Thimphu and Phuentsholing.”
The public consultation meetings resulted in a productive discussion and several comments were received and subsequent review was carried out. Based on the consultation, important areas where amendment to the Act 2004, is required are as follows
Tenancy Authority (section 3&4)
There is a need to redefine the tenancy authority under section 3 of the Act to avoid confusion and to enable the people to know exactly where to approach in the event of a dispute.
In a decentralized system, tenancy authority should be at the local level and there is a need to strengthen and empower the local governments to enforce and implement the Act and for this purpose, a new subsection is needed to be inserted in the Act.
The ministry’s role should be to review the Act, rules and oversee the implementation of the Act while the local governments should be responsible for the administration and enforcement of the Act.
All local governments must be empowered to establish the disputes settlement committee with specific powers to summon, investigate and fine so that they can hear complaints and render decisions.
Rental Agreements (section 6)
It is suggested that the tenancy agreement should be mandatory and responsibility must be fixed on both the house owner and the tenant with penalty provisions for not having an agreement.
All tenancy agreements should be executed in three original copies and one copy must be made to be submitted to the local tenancy authority to enable the local government to monitor the rents, housing situation and implementation the act effectively.
Even complaints not entertained if there is no agreement. Provisions have to be taken to be made for a system of complaint and imposing of penalties.
Rent
Most stakeholders representing the tenants have suggested that the rents be determined by the government. However, the rental charges are driven by the market and government cannot fix rents. The government can consider a broad guideline based on the type, size, standard of the house which is not legally binding, but will enable house owners and tenants to negotiate rents.
Rent increase/revision (sub-section 10.1&10.2)
Rent revision was a contentious issue as some tenants complained that the percentage for maximum rent increase should be less while house owners have cited that owing to the increase in cost of building materials, inflation the present permissible rent increase was less. However, it was felt that the maximum permissible limit of 10% for rent increment after every 2 years is found to be fair to both the tenants and house owners. However, this may be further reviewed during amendment.
A separate section is deemed necessary to apply to house stock held by the government or government owned enterprises.
The house determined that the Tenancy Act would be put up for amendment and deliberate in the next session of the parliament

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