India is in the middle of a major reset of its tenancy framework, with new “Home Rent Rules 2025” and broader Model Tenancy Act–based reforms reshaping how rental agreements, deposits, rent hikes and evictions are handled as of late 2025. These changes aim to formalise rental contracts, protect tenants from arbitrary practices, and give landlords clearer enforcement and tax treatment, though much still depends on state-level adoption and implementation.
Background and legal shift
The Union government’s Model Tenancy Act, 2021 (MTA) is the core template for new tenancy laws, requiring written agreements, capping deposits and clearly defining eviction grounds. From 2024–25, new “Home Rent Rules 2025” and similar reform packages have been announced to operationalise and update MTA-style provisions nationwide, subject to each state and UT notifying its own law. Many existing rent control statutes continue for old tenancies, so the new framework applies primarily to fresh or renewed agreements.
Key features of the new tenancy rules
- Written, registered agreements are now mandatory for new tenancies, generally to be filed with a Rent Authority or registrar within about 60 days; late registration can attract fixed monetary penalties (often around ₹5,000).
- Security deposits for residential premises are capped at roughly two months’ rent (and around six months for commercial), replacing older practices of 6–10 months’ deposits in many cities.
- Rent increase norms are being standardised, with rent hikes linked to pre-agreed terms in the written contract rather than unilateral increases, and longer, clearly defined lease terms being encouraged.
- Eviction grounds and procedures are codified, including specific rules for non‑payment (for example, escalation to a Rent Tribunal after repeated defaults or arrears of several months) and misuse or unauthorised occupation.
- Dedicated Rent Authorities and Tribunals are envisaged for faster disposal of rent disputes compared to regular civil courts.
Digital compliance and documentation
A strong digital push runs through the new regime, with many states moving to online agreement creation and e‑stamping. New national rules from 2025 mandate that fresh rental agreements carry a valid digital stamp; non‑compliant agreements can trigger a ₹5,000 penalty, typically on the landlord. Online registration portals, Aadhaar‑linked verification and digital records are intended to reduce fraud, curb informal cash deals and make agreements easier to enforce.
Effects on tenants
For tenants, the biggest gains are financial relief and legal predictability.
- Lower deposit caps significantly reduce upfront costs for renting in metros and tier‑1 cities, improving affordability and mobility for students, migrants and young professionals.
- Mandatory written, registered, digitally stamped agreements improve clarity on rent, duration, notice period, maintenance and eviction, reducing the risk of informal side‑conditions and sudden rent hikes.
- Clearer eviction norms and the requirement of notice and due process curb arbitrary lockouts or overnight eviction attempts, giving tenants stronger grounds to challenge illegal dispossession.
- Faster forums like Rent Tribunals can offer quicker relief in disputes over deposit refunds, harassment, or wrongful termination, compared with traditional civil litigation.
However, tenants do face stricter expectations to pay on time and avoid unauthorised sub‑letting or misuse, with some proposed state rules including monetary penalties (instead of earlier short jail terms) for serious violations.
Effects on landlords
Landlords benefit from greater formalisation, clearer enforcement and more favourable tax provisions.businesstoday+2
- Written, registered contracts and digital stamping reduce documentation risk and make it easier to prove terms in court or before a Rent Tribunal.
- The MTA framework allows speedier eviction in cases of repeated non‑payment, unauthorised occupation or continued stay after lease expiry (including provisions for enhanced rent or double rent in overstay situations in some models).
- Recent fiscal changes raise the TDS threshold on rental income (for example, from ₹2.4 lakh to around ₹6 lakh annually) and streamline how rental income is reported as “income from house property”, easing compliance for smaller landlords.
- Some policies and state schemes under the new framework promise incentives or tax credits for landlords who keep rents affordable or invest in energy‑efficient upgrades, encouraging long‑term, formal participation in the rental market.
On the flip side, landlords must adjust to tighter caps on deposits, formal registration timelines, and digital stamping rules, which may slightly increase upfront compliance work and limit their leverage in purely informal arrangements.
Tenants vs. landlords: impact snapshot
| Aspect | Impact on tenants | Impact on landlords |
|---|---|---|
| Security deposit caps | Lower upfront cost; easier entry into rentals. | Reduced buffer but clearer, standardised norms across tenants. |
| Written, registered agreements | Stronger proof of rights, clarity on terms and notice. | Better enforceability of rent, duration and obligations. |
| Eviction and default rules | Protection from sudden eviction; defined process and timelines. | Faster legal remedy in cases of repeated non‑payment or misuse. |
| Digital stamping & online portals | More transparent, traceable agreements; less room for fraud. | Penalties for non‑compliance but smoother documentation once adopted. |
| Tax and policy incentives | Indirect benefit if incentives keep rents stable. | Higher TDS threshold and potential incentives improve returns and compliance ease. |
Overall, the new tenancy framework as of October 2025 is nudging India toward a more contract‑driven, transparent rental market that protects tenants from excesses while giving landlords clearer legal tools and better‑aligned tax rules.
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