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Is rent increase per year compulsory ?


08-Jul-2024 (In Landlord/Tenant Law)
Would like to know more about Section 6 & 8A of Delhi Rent Control Act. can landlord increase rent after 1 year?, I mean at what basis landlord hike 10% every year. Is it mandatory? If not agreed by tenant are landlord forcefully can vacate the room..
Answers (3)

Answer #1
835 votes
The percentage of increase in rent should be stated clearly on your rental agreement along with other terms so that you are aware of what to expect at the time of renewal.
Sometimes Landlords use this for some tenants who refuse to vacate the premises which lose them a chance for other potential tenants who offer them more.
Be that as it may, once you enter into a contract, you are bound by its terms and have to act accordingly. If enhancement of rent is not in your contract then you are not bound to do so. Also if incase the landlord does not accept your fixed rent then you have an option of depositing the same in court.
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Answer #2
821 votes
Rent cant be increased by 10% every year only if he spends on repairs etc which are not included in determining your current rent. Otherwise he can increase only after 3 years. Also he cannot forcefully evict you. Consult me for more details.

Regards
Gaurav
Advocate
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Answer #3
574 votes
You have asked the following questions:

1. Is hike in rent every year compulsory.
2. At what basis landlord hike 10% every year.
3. Is it mandatory.
4. If not agreed by tenant are landlord forcefully can vacate the room.
5. Would like to know more about Section 6A & 8 of Delhi Rent Control Act.

Delhi Rent Control Act, 1958 (DR Act) exclusively deals with and applies only to the premises which has been let out for a rent upto Rs. 3500/-. Meaning thereby, if any property rented in Delhi which have a rent exceeding Rs.3500/-, the DRC Act shall not apply.

An amendment to the Delhi Rent Act was made w.e.f. 1st December, 1988. The premises, monthly rent whereof exceeded 3,500/- were taken out of the purview of the Act; Section 6A was incorporated enabling the landlord to have the rent increased by 10% every three years by issuing a notice under Section 8 intimating to the tenant of his desire to so have the rent increased and the increased rent became due and recoverable after expiry of 30 days from the date on which the notice was given.

1. Is hike in rent every year compulsory-

Under the DRC Act, the rent can be revised once in three years. Meaning thereby, if A(landlord) has let the premises to B(tenant) for a sum of Rs.2000/- per month, the rent can be increased by 10% in three years i.e. there must be a gap of three years in revising the rent.

Below mentioned is the extract of Section 6A:

Section 6-A. Revision of rent.—Notwithstanding anything contained in this Act, the standard rent, or, where no standard rent is fixed under the provisions of this Act in respect of any premises, the rent agreed upon between the landlord and the tenant, may be increased by ten per cent every three years.

Therefore, under DRC Act, the rent cannot be revised every year. It can be revised once in a three years after giving Notice to Tenant regarding enhancement of rent under Section 8.

2. At what basis landlord hike 10% every year-

As already provided under Section 6A, the rent agreed between the landlord and the tenant, may be increased by 10% in every three years and not every year.

The Division Bench of the Hon'ble Delhi High Court in Santosh Vaid & Anr. v. Uttam Chand, 2012 SCC OnLine Del 960 has recently held that such increase in rental can only be made as per the mechanism provided in the DRC Act and not otherwise.

3. Is it mandatory-

Not at all. Increase of rent by 10% in every three years is the discretion of the Landlord. He may or may not increase the rent in every three years.

4. If not agreed by tenant are landlord forcefully can vacate the room-

Payment of rent on time is a sine qua non i.e. pre-requisite for enjoying the tenancy. If the proper and valid notice is served upon the tenant, the rent stood enhanced after service of notice and expiry of 30 days. It is immaterial that if the tenant does not agree to enhance the rent in view of Section 6-A of the Act.

Same was also observed by the Hon’ble Delhi High Court in Praneeta Soni v. Panchshila Hospitality Ventures Ltd., 2014 SCC OnLine Del 1434, "40. … It is settled law that once the proper and valid notice is served upon the tenant, the rent stood enhanced after the service of notice and expiry of 30 days. It is immaterial that if the tenant does not agree to enhance the rent in view of Section 6-A of the Act. The said section mandates and gives an option to the landlord and if the option is exercised by the landlord, the enhancement is automatic. The tenant after the expiry of 30 days cannot dispute 10% increase of rent after three years."

However, it is pertinent to note that if the tenant defaulted in depositing the rent even then the landlord have no right to evict the tenant forcefully. The landlord shall exercise his right to get possession of the premises according to the due procedure of law and not otherwise. The landlord can only move to the Rent Controller against the tenant on the grounds mentioned under sub section (1) of Section 14 of DRC Act.

The Delhi High Court in its order dated 5th December, 2005 in CM(M) 948/2004 titled as Kamlesh Bagga v. Mahinder Kaur held that “…the Increase of rent from the contractual rent under the Delhi Rent Control Act can only be done by recourse to Section 6A thereof. A unilateral notice increasing rent beyond ten percent is not permissible under Section 6A of the Delhi Rent Control Act and cannot be acted upon to take the case out of the purview of the Delhi Rent Control Act.”

The Hon'ble Delhi High Court further in Santosh Vaid & Anr. v. Uttam Chand, 2012 SCC OnLine Del 960 observed as under:

26. Rate of rent is a matter of contract and can be varied in accordance with agreement only and not unilaterally. The Rent Control Legislations enacted in the pre-independence and immediately after independence era to prevent exploitation of tenants provided a statutory mechanism enabling a tenant to, notwithstanding having entered the premises with a promise to pay rent at a certain rate, apply to the Rent Controller/Court for fixation of standard rent which as aforesaid was generally lower than the prevalent market rent. However, with the passage of time, several Courts have found such provisions in the State Rent Legislations entitling tenants to wriggle out of the agreed rent to be archaic and struck down the same. Else the rent agreed between the landlord and the tenant binds both of them and neither is entitled to unilaterally vary the same during the period for which it has been agreed. On the expiry of the said period, if unable to agree on extension / renewal of the lease at a mutually agreed rate, the remedy of the landlord is only to evict a tenant and to for the period of unauthorized occupation recover mesne profits defined in Section 2(12) of the CPC as profits which the person in wrongful possession actually received or might with ordinary diligence have received. A landlord cannot be heard to while not wanting to evict the tenant, as per his own calculation claim increased rent. However, if the premises are within the purview of the Rent Act which prohibits the landlord from evicting the tenant for the reason of expiry of the term for which the premises were let out, the landlord cannot while being so prohibited be permitted to claim mesne profits or increase in rent unless permitted under the Rent Act. If the eviction is prohibited, the possession cannot be said to be unauthorized and the question of mesne profits does not arise. If it were to be held that though owing to the prohibition against eviction contained in the Rent Control Legislations, the landlord is not entitled to evict the tenant but is nevertheless entitled to recover mesne profits for the period after the expiry of the period for which the premises were let out, the same would result in reducing the Rent Control Legislation to a dead letter and defeating its purpose. The same cannot be permitted. Thus, in the absence of a provision in the statute it cannot be held that a landlord is entitled to market rent from a protected tenant.

27. The Apex Court in Chander Kali Bai v. Jagdish Singh Thakur AIR 1977 SC 2262 held that the occupation of a tenant in a premises governed by the Rent Control Legislation becomes unauthorized and wrongful only after an order of eviction under the said legislation is passed against him and mesne profits can be recovered for the period thereafter only and not from the date of determination of tenancy since such a tenant continues to be a tenant (statutory tenant) till order of eviction under the Rent Control Legislation is passed. A Division Bench of this Court in Hindustan Steel Pvt. Ltd. v. Usha Rani Gupta AIR 1969 Delhi 59 held that in case of property of which rent is controlled by the Rent Control Act the landlord cannot complain of having suffered any loss by being deprived of possession of the property, beyond the rent for which the property is let out to the tenant holding over except to the extent of any permissible increase of rent under the Rent Control Act itself.

28. Even though the 10% increase in rent every three years provided for under the Delhi Rent Act may be perceived by some as inadequate but that is no reason for this Court to provide for a higher or more frequent increase. The same falls in legislative domain. This Court cannot step into the shoes of legislature (Union of India v. Deoki Nandan Aggarwal 1992 Supp(1) SCC 323). It may be noted that Section 6A (supra) was inserted in the Delhi Rent Act with effect from 1st December, 1988 to quell the criticism thereof of being unevenly balanced against the landlord. The Legislature in its wisdom having considered increase in rent as provided in Section 6A as appropriate to balance the rights of the landlord and the tenant governed by the provisions of the Delhi Rent Act, it is not for this Court to delve into the validity thereof particularly in exercise of appellate/revisionary jurisdiction.

29…A landlord of a premises governed by the Delhi Rent Control Act, 1958 is entitled to have increase(s) in rent only in accordance with Section 6A and 8 thereof and not otherwise; such a landlord cannot approach the Civil Court contending that the rent stands increased or should be increased in accordance with the inflation or cost price index; the jurisdiction of the Civil Court in this regard is barred by Section 50 of the Delhi Rent Act.
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