Old Tenancies Under the Maharashtra Rent Control Act: How Much Can Rent Go Up?

For tenancies governed by standard rent, section 11 of the Maharashtra Rent Control Act allows a 4% annual increase, plus limited increases for improvements and repairs. Why leave and licence is different.

A lot of older South and Central Mumbai buildings still have tenancies that began decades ago. Owners who inherit these flats are often surprised at how little they can change the rent. The reason is the Maharashtra Rent Control Act, 1999.

Section 11: permitted increases

4% a year: the landlord can increase the rent by 4% per annum.
Improvements or structural alterations: a reasonable increase, if 70% of tenants agree in writing. Repairs the landlord must do anyway do not count.
Special additions (new amenities): up to 15% a year of the certified cost, with a municipal certificate.
Special or structural repairs: a temporary increase of up to 25% of standard rent until the cost is recovered.

A protected tenancy and a leave and licence are different worlds. Know which one you have before you plan.

Leave and licence is different

Most rentals in Mumbai today are on a leave and licence agreement. The licensee gets permission to use the flat for a fixed term, rent is whatever the parties agree, and the agreement must be registered. That is why owners use leave and licence and renew it rather than creating a tenancy.

Registration is the landlord's job

Section 55 of the Act requires rent agreements to be in writing and registered. The landlord is responsible, and failure can attract up to three months' imprisonment, a fine of up to Rs 5,000, or both.

If you have inherited a tenanted flat

Get copies of old rent receipts and any court orders.
Check whether the building is cessed. See old cessed buildings in South Mumbai.
Talk to a lawyer before changing rent or asking the tenant to leave.

Frequently asked questions

How much can rent be increased under the Maharashtra Rent Control Act?

Section 11 allows a 4% increase per year, with further limited increases for improvements, special additions and structural repairs.

Does the 4% rule apply to leave and licence agreements?

Most modern Mumbai rentals are leave and licence agreements, where rent is set by agreement for a fixed term.

Sources

This is general information, not legal or tax advice. Rules change, so check your own case with a lawyer or CA.

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Yanik

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