Chandigarh Rolls Out Major Rental Market Reforms

Synopsis: Chandigarh introduces major tenancy reforms with mandatory rental agreements, capped security deposits, and fast-track dispute resolution to modernise and formalise the city’s rental market.

Chandigarh has introduced sweeping tenancy reforms aimed at modernising its rental housing market and creating a more transparent framework for landlords and tenants. The Centre has extended the Assam Tenancy Act, 2021, to the Union Territory, replacing the decades-old East Punjab Urban Rent Restriction Act, 1949, which officials believe had become outdated for the city’s evolving urban housing needs. 

The new framework introduces mandatory written tenancy agreements, caps on security deposits, stricter penalties for overstaying tenants, and faster dispute resolution mechanisms. Under the revised rules, landlords and tenants must register rental agreements with the Rent Authority, bringing greater transparency and reducing reliance on informal arrangements that often led to prolonged disputes.

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One of the key provisions of the reform is the introduction of financial penalties for tenants who continue occupying premises after the tenancy period expires. Such tenants will be required to pay double the monthly rent for the initial two months of unauthorised stay and four times the rent thereafter until the property is vacated. Officials said the measure aims to address long-standing concerns of landlords regarding delayed property possession.

The law also seeks to protect tenants by capping security deposits at two months’ rent for residential properties and six months for commercial spaces. In addition, landlords are prohibited from arbitrarily disconnecting essential services such as electricity, water, parking access, and sanitation. The framework further defines maintenance responsibilities and regulates landlord access to rented premises through prior notice requirements.

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To streamline conflict resolution, the reforms establish a dedicated three-tier adjudication system comprising the Rent Authority, Rent Court, and Rent Tribunal. Authorities expect this specialised mechanism to significantly reduce delays compared to conventional civil court proceedings, where tenancy disputes often continued for years.

Real estate experts believe the reforms could formalise Chandigarh’s rental ecosystem, improve investor confidence, and increase the availability of rental housing. The move is also expected to support digital recordkeeping and create a more structured, market-driven rental environment in the city.