New Rental Rules 2025: Government Overhauls Rent Laws — What Tenants and Landlords Must Know About the Updated Model Tenancy Act

India’s rental housing market is entering a new era. For decades, both tenants and landlords have faced confusion, unfair practices, lack of documentation, and long legal battles. With more people moving to cities for work and education, the demand for rented homes has increased sharply — and so have disputes.

To address these widespread issues, the government has introduced the New Rental Rules 2025, based on the Model Tenancy Act (MTA) and important budget proposals. These new reforms aim to make the rental system more transparent, balanced, reliable, and legally protected for both sides.

The new rules address several major problems:

• High security deposits

• No proper agreements

• Sudden eviction

• Unreasonable rent hikes

• Long legal delays

• Lack of clarity in responsibilities

This article explains the new laws in simple English so that anyone — tenant or landlord — can understand their rights and responsibilities easily.

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Why Are New Rental Rules Needed?

India’s population is rapidly urbanizing. Millions of people leave their hometowns every year to find better jobs, colleges, or business opportunities in bigger cities. With real-estate prices becoming unaffordable, renting is the only practical option for most.

However, the rental sector has long been unorganized. Some of the most common problems include:

• Tenants losing their security deposit without reason

• Landlords issuing sudden “leave the house immediately” notices

• Verbal agreements or unregistered contracts

• Excessive advance rents demanded in major cities

• Tenants refusing to pay rent for months

• Court cases dragging on endlessly

The New Rental Rules 2025 aim to fix these issues and create a predictable, fair system that protects both parties.

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1. Mandatory Registration of All Rent Agreements Within 60 Days

The most important reform is the introduction of compulsory registration.

What does the law say?

Every rent agreement must be registered within 60 days of signing.

Why is this important?

• It eliminates verbal or half-written agreements

• It provides strong legal protection

• It clearly defines rights and responsibilities

• It prevents landlords from adding unfair terms later

• It ensures transparency in rental payments and deposits

How can agreements be registered?

Two simple methods:

1. Online registration through the state’s property registration portal

2. Offline registration at the nearest registrar or sub-registrar office

Penalty for not registering

Landlords who fail to register the agreement within 2 months may face a penalty of ₹5,000.

This rule aims to bring formal structure to the rental market and reduce disputes caused by unclear conditions.

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2. Security Deposit Capped at a Maximum of Two Months’ Rent

This is one of the biggest reliefs for tenants across India.

Earlier, landlords in many cities — especially Bengaluru — used to demand massive deposits ranging from 6 months to even 12 months’ rent. This was financially stressful and often unreasonable.

What the new rule says:

• For residential properties, the security deposit cannot exceed two months’ rent

• For commercial properties, landlords can take up to six months’ rent as deposit

This change makes renting far more affordable and reduces the financial burden on tenants who frequently move due to job changes.

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3. Clear and Fair Rules for Rent Hike

Rent increases have also been standardized.

Under the new rules:

• Landlords must give advance written notice before increasing rent

• Rent can be increased only as per the terms mentioned in the agreement

• No sudden or arbitrary rent hikes are allowed

This ensures predictability for tenants and eliminates unfair rent inflation.

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4. No More Sudden Eviction — Legal Process Required

One of the biggest fears for tenants has always been:
“What if the landlord asks me to leave immediately?”

The new laws ensure that such sudden eviction is not possible.

Key protections:

• A landlord cannot force a tenant to vacate without following proper legal procedure

• A valid reason must be provided for eviction

• A written notice period is mandatory

• Tenants must be given adequate time and a fair hearing

This gives tenants a sense of stability and protects them from harassment or pressure tactics.

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5. Faster Resolution of Tenant–Landlord Disputes

The long delays in courts have discouraged both tenants and landlords from seeking justice.

To solve this, the government has created:

• Rent Authorities

• Special Rent Courts

• Rent Tribunals

Goal: Resolve disputes within 60 days

This accelerated process aims to save time, reduce litigation, and promote trust between both parties.

Types of disputes covered:

• Security deposit return issues

• Disputes over rent increase

• Eviction-related conflicts

• Repair and maintenance liability

• Non-payment of rent

This is a major step toward making rental housing more efficient and structured.

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6. Strict Action Against Tenants Who Don’t Pay Rent

While the rules protect tenants, they also ensure fairness to landlords.

If rent is not paid for 3 months or more:

The landlord can file a case with the Rent Tribunal for quick action. Unlike earlier times, these cases will not take years to resolve.

This discourages misuse of property and ensures that tenants take their payment responsibilities seriously.

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7. TDS Limit Increased — Tax Relief for Landlords

Previously, tenants had to deduct TDS (Tax Deducted at Source) if annual rent exceeded ₹2.4 lakh.

Under the new rules, this threshold has been increased to:

₹6 lakh per year

Benefits of this change:

• Less TDS deduction

• More rental income directly received by landlords

• Reduced paperwork for tenants

• A more efficient and transparent tax system

This move encourages landlords to formalize rental contracts instead of keeping them off-the-record.

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Benefits of the New System for Tenants

The New Rental Rules 2025 provide multiple advantages:

✔ Lower security deposits

✔ Predictable rent increase

✔ Greater legal protection

✔ Protection from sudden eviction

✔ Faster resolution of disputes

✔ Clear clarity on maintenance responsibilities

Tenants will now have more stability, financial relief, and peace of mind.

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Benefits for Landlords

Landlords, too, gain significantly:

✔ Speedy relief in case of non-payment

✔ Legal backing through registered agreements

✔ Lower TDS deduction

✔ Better tenant accountability

✔ Less risk of disputes

This creates a healthier rental ecosystem where property owners feel more secure.

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How the New Rules Improve the Rental Market

The New Rental Rules 2025 is a major step toward modernizing India’s rental market.

It brings:

• Structure to an informal sector

• Clarity in responsibilities

• Protection for both sides

• Transparency in financial transactions

• Speed in resolving conflicts

The reforms aim to make renting a home as easy and predictable as possible.

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What Tenants and Landlords Should Do Now

To comply with the new system:

Tenants should:

• Insist on a registered rent agreement

• Check that security deposit does not exceed the legal limit

• Keep rent receipts and communications in writing

• Know their rights related to eviction

Landlords should:

• Prepare agreements in writing

• Register them within 60 days

• Follow the legal rent increase process

• Maintain transparency in deposits and receipts

• Approach Rent Tribunals for disputes instead of delaying

Following these guidelines will ensure smoother relations and fewer legal complications.

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Conclusion

The New Rental Rules 2025 mark a major transformation in Indian housing laws. Based on the Model Tenancy Act, these rules create a balanced system that respects the rights of both tenants and landlords.

From mandatory agreement registration and limited security deposits to fair rent increases, structured eviction procedures, and fast-track dispute resolution — the reforms aim to make renting in India safer, simpler, and more predictable.

As more states begin implementing these rules, millions of tenants and property owners will benefit from a system that is transparent, accountable, and fair.