Tenancy Bill aims to give tenant and house owner equal rights

The joint sitting of the Parliament passed the Tenancy Bill 2014, with a vote of 66 to two with four abstaining. The chairperson of the joint committee, Karma Tenzin, said that the bill will benefit the society because the amendment would give equal rights and benefits to both tenants and property owners. The earlier bill was seemed to benefit owners more rather than tenants.

Of 12 clauses the most discussions in the joint sitting was on the penal interest of 24% per annum to be levied if a tenant or a lessee fails to pay rent on time. Suppose a person rents a house at Nu.10,000,  in case a defaulter has not paid the rent for 30 days he or she needs to pay nearly Nu. 200 as a fine.

Section 9.1.3 of the bill states in the event that a tenant fails to pay the rent on time, he or she shall pay the amount with interest at the rate of 24% per annum on the due. On the other hand, section 25 clearly says “the owner or lessor who fails to refund the security deposit as required under section 12 of the Act shall pay the security amount and compensation at the rate of 24 % per annum in the security deposit payable to tenant or lessee.”

The chairman, who is also Wamrong representative, pointed out that as any penalty that a house owner could charge is a maximum 24%, the house owner could also be penalized for an equivalent fine if there is any wrongdoing. He justified that the 24% penal interest rate was applicable as per the circular issued by Ministry of Finance for taxes that were over due to the government including audit irregularities. Some MPs including National Council (NC) member, Dagana, Sonam Dorji, expressed that the penal interest is too high for tenants to pay and asked for clarification. According to the Royal Monetary Authority the 20% penal interest rate in housing loans is borne by the defaulters.

As for setting penal interest rate lower than 24%, Karma Tenzin said people would not take it seriously and not pay the rent on time. According to the bill the owner or lessor can evict the tenant or lessee only on specific grounds. There are if a tenant owes rent for more than two months, a tenant refuses to vacate the rental unit after the expiry or termination of the tenancy, the tenant does not comply with the terms and conditions of the agreement or the provisions of this Act, the tenant creates nuisance for other tenants  and carries out any dangerous activities. Otherwise, a landlord who evicts the tenant or lessee is liable for a fine equivalent to one month’s rent. It also states that the person evicted has the right to be reinstated in the rental unit or leased land along with compensation equivalent to two months’ rent.

The bill also includes new section that states any person who fails to answer or abide by the Dispute Settlement Committee’s service of process or summons under this Act shall be liable for a fine equivalent to one month to three months wage rate of the minimum wage.

An owner or a tenant who fails to pay any fines, rents or any rental dues as required by the Dispute Settlement Committee after acceptance of the decision, shall be liable to pay fine at the rate of 24 % per annum. “The agreement it has to be drawn in accordance with the Act,” the chairman added.

The Ministry of Work and Human Settlement is to designate a Department or Agency as the main Tenancy Authority or Dispute Settlement Committee.

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