Hinting earlier about a sound rental policy across the country, the government is likely to make some major announcements, which are expected to effectively aid the government in achieving its vision of providing housing to all Image Credit: Shutterstock

The Indian Union Cabinet’s approval for the Model Tenancy Act is being hailed as a landmark moment in Indian real estate. In one of the most significant developments for residential real estate investors, no one will be allowed to enter into a rental situation without a written agreement – and that’s not all.

Aimed at increasing confidence of landlords to rent out their vacant properties, this Act will serve as booster for NRI investments. For an NRI investor, it is a great assurance that the tenant of their property is bound by legal terms. Further, the act defines the timeline within which any rental disputes will be resolved.

The law also calls for a digital platform where tenancy agreements need to be submitted to the rent authority in future. Digital infrastructure is more convenient and brings an added level of transparency for NRI landlords. With this Act, there is now a clear demarcation of responsibilities between a tenant and landlord.

A wide safety net

NRIs have always shown a keen interest in investing in Indian real estate. However, the uncertainties around ensuring that tenants uphold the terms and condition of the rental agreements were, so far, significantly high for NRIs. The entire process of finding a tenant and collecting the dues is usually carried out by family or close associates in India.

Institutional push

With the rental market now becoming more organized, institutional service providers will come into the picture to address the market demands. The increased trust and confidence thus generated will enable NRIs to easily monetize their existing vacant residential properties by letting them out in a coherent, cohesive, and easily manageable way.

The last two quarters have seen significant traction of ready-to-move inventories in India’s prime residential markets. The new regulatory framework will provide additional impetus to this demand. With the implementation of the Model Tenancy Act, prices of RTMI (ready-to-move-in) properties are expected to increase soon.

Even apart from this much-awaited Act, the current situation has multiple benefits for NRI investors. Currency rates are favorable, home loan rates are at an all-time low, real estate prices have become affordable, and developers continue to offer good deals.

With the regulatory framework for rental homes now been strengthened and more transparent, it is the perfect time for NRIs to invest in Indian real estate for sustained rental income.