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Chandigarh has introduced a new tenancy framework by extending the Assam Tenancy Act, 2021 to the Union Territory, replacing the decades-old East Punjab Urban Rent Restriction Act, 1949. The move is expected to formalise the city’s rental housing market, where a large share of residents live in rented homes. The new law makes written tenancy agreements mandatory, caps security deposits, introduces a three-tier dispute resolution system and brings digital registration of rent agreements. Officials believe the reforms will improve transparency, reduce disputes and increase the supply of rental housing across residential and commercial segments.
Chandigarh has implemented a major tenancy reform after the Centre extended the Assam Tenancy Act, 2021 to the Union Territory, replacing the East Punjab Urban Rent Restriction Act, 1949 that had governed rental arrangements in the city for several decades. The move is expected to change the way residential and commercial rental properties are managed and regulated across Chandigarh. Advertisement
The new framework comes at a time when a significant portion of Chandigarh’s population lives in rented accommodation, including students, working professionals and migrant families. Real estate observers believe the earlier rent law had become outdated and often discouraged property owners from formally renting out homes because of lengthy legal procedures and concerns around tenant eviction.
Under the revised tenancy system, all rental arrangements must now be supported by a written agreement submitted before the Rent Authority. The agreement will clearly mention details such as monthly rent, duration of tenancy, responsibilities of landlords and tenants, rent revision clauses and maintenance obligations. Authorities have clarified that verbal agreements or informal arrangements will no longer receive legal recognition under the new structure.
Officials said the administration is in the process of operationalising the complete framework, including an online portal for digital registration of tenancy agreements. Until the online system becomes fully functional, agreements can be submitted physically through the designated authority. The administration expects the new system to improve documentation and reduce disputes linked to undocumented rental arrangements.
One of the key provisions under the law is the limit placed on security deposits. Landlords of residential properties can now collect a maximum security amount equivalent to two months’ rent, while owners of commercial properties can charge deposits of up to six months’ rent. The provision is aimed at reducing the financial burden on tenants, particularly those shifting to the city for employment or education.
The law also introduces a dedicated three-level dispute resolution mechanism consisting of the Rent Authority, Rent Courts and Rent Tribunals. This structure has been created to ensure quicker settlement of tenancy-related disputes, which earlier often remained pending in civil courts for long periods. Officials indicated that cases under the new framework are expected to be resolved within 60 days, while adjournments will be restricted to three instances to avoid delays.
The revised framework clearly defines conditions under which eviction can take place. Property owners can seek eviction in cases involving non-payment of rent, misuse of property, unauthorised structural changes or illegal subletting. At the same time, tenants will receive protection against arbitrary eviction during the agreement period unless specific terms are violated.
The reforms also include strict provisions for overstaying tenants. If a tenant continues occupying the property after the tenancy agreement expires, penal rent provisions will apply. Under the rules, tenants may have to pay double the monthly rent for the initial two months of overstay and four times the rent after that period until the premises are vacated.
Industry experts believe the changes may encourage more property owners to formally lease vacant residential units and commercial spaces that were previously kept out of the rental market due to legal uncertainties. The reforms are also expected to improve transparency in rental transactions through proper record maintenance and digital registration systems.
The tenancy reforms are part of a wider legal restructuring exercise recently introduced in Chandigarh. The administration has also implemented changes related to land administration, property-related governance and urban management laws to modernise regulatory systems in the Union Territory and improve ease of living for residents.
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