Law on residential tenancies introduced

[Key words - tenancy - property - residential - rent - lease - law - tenant - landlord]A law regulating the renting of residential properties in the Maldives has been introduced. The citation for the law is Residential Tenancies Act 21/2021.Scope of the lawThe law sets out the rights of the landlord and tenant, balances out their rights against one another, sets out the process of renting, and provides for minimum standards to be met at rental properties in addition to outlining a dispute resolution mechanism.The law applies to transactions between two private parties and government-provided social housing. The scope of the law excludes tourist hotels and guesthouses, staff accommodation provided to staff of tourism properties, boarding facilities of educational institutions, day rentals, and properties leased for non-residential purposes.Approval and registration  Every residential property covered by the law must be approved by the relevant local council as a rental property and included on the local council’s register of rental properties. The law prohibits renting of a property without the approval and registration of the property with the local council.If the rental property is made up of several floors, and some of those are rented out, the relevant floors must abide by the requirement of registration and approval.The landlord and tenant The owner of the property is automatically assumed to be the landlord. If any person is given the authority to rent the property on the owner’s behalf, such authorized persons will be treated as the landlord for the purposes of the law. If multiple people are acting together to rent out a property, they will be treated together as the landlord.The person taking the property on rent is assumed by law to be the tenant. If multiple people are      acting together to take a property on rent, the law will treat all of them together as the tenant.The tenancy agreement For properties rented out for more than six months, a written tenancy agreement must be concluded between the parties. This agreement must be signed by both the landlord and tenant in the presence of two witnesses. Within 10 days of execution of the tenancy agreement, the landlord must notify the local council of the agreement. The processes of notification are to be detailed in subsequent regulations.The law requires the landlord to bear the costs of concluding the tenancy agreement.The law has provided a detailed list of essential particulars to be covered in a tenancy agreement. Additionally, it also asks the landlord to attach to the tenancy agreement evidence of certain essential licenses, permits and approvals (relating to the property and parties).The law also goes on to prohibit certain matters from being included in the tenancy agreement.Rent and deposit Detailed provisions are included in the law on security deposits, and restrictions on rent revisions during the agreement. It is clearly stated that the security deposit cannot exceed rent of 2 months and the landlord must provide a receipt of the deposit to the tenant. At the end of the tenancy, the security deposit must be repaid within 15 days less any deductions authorized by law.Similarly, while rent may be agreed in the tenancy agreement to stagger and vary at different periods of the tenancy, the landlord may not revise the rent during the life of an existing tenancy.Period of tenancy The law does not put a cap on the tenancy period. In fact, it overrides any other law and states that the period of tenancy and rent may be subject to agreement between the parties. The law provides 5 ways in which a tenancy agreement can come to an end:

1. Mutual agreement;
2. Expiry of term;
3. Termination as provided in the agreement;
4. Frustration of performance by a court order; and
5. Enforcement of a mortgage.

Termination of tenancyAn agreement may also be prematurely terminated by the landlord if the tenant is in breach of the tenancy agreement. However, the process is heavily regulated.The law also allows the agreement to be terminated before end of term by the landlord by giving 3 months’ notice if:

1. The property requires repair and maintenance that cannot be carried out while the property is tenanted;
2. The landlord requires the property for personal occupation;
3. The landlord needs to provide habitation for immediate family; and
4. The property is subject to an immediate sale and transfer.

Additionally, the landlord may be subject to a fine not exceeding MVR50,000 if the they terminate      the tenancy to provide the property on rent to a third party or use it for any purposes outside permissible grounds.If the agreement is terminated for default of the tenant, the landlord is to provide a notice of at least two months.The landlord may not terminate the agreement without a reason that is sanctioned by law.The tenant may terminate the agreement by giving notice of one month, if the landlord is in breach of the agreement or if the tenant wants to abandon the tenancy on its own for any reason. The tenant may also provide rent for the month in lieu of the notice and vacate the premises immediately.Regulations and existing tenancies The Housing Ministry is by definition the responsible ministry for the law. They are to make regulations under the law within 90 days of the commencement of the law. The law has come into effect from the date of its publication in the gazette.The law repeals and replaces section 28 of the existing Land Act and the regulation(s) made under it.Existing tenancies are to continue for 6 months, and migration to the new law will have to be completed within that period. The transitional provisions are to be provided in the regulations made under the law. By MNContributed by IN, AIPhoto: Courtesy Mihaaru