Introduction

In Bangladesh most people dwell in as a tenant of others premises and most tenant faces difficulties in coping up with the rise in rent every year. However, the enactment of the Rent Control Act 1991 came as a rescue with the objective of keeping rents under control and reasonable for the tenants. In addition, this act also gives protection in upholding the rights and interests of both landlords and tenants. This article will give an overview of the legal rules related with renting, the legal meaning of Landlord and tenant, required documents for rental agreement, power of a controller, rights and duties of Landowner and tenant, how to serve notice, tax payment of house property etc. In addition, we also focus on penalty system, suit filing and other related matters.

Landlord and Tenant Disputes

Landlord and Tenant Disputes

 

Who is a Landlord?

Landlord means any person entitled to receive the rent from a tenant of his own premises. He is entitled to receive the rent if the premises were let to a tenant for a fixed term. A landlord can rent his premises for residential, business and others purpose.

Who is a Tenant?

Tenant means any person who pay rent regularly for his premises and continue his possession for a definite term. A tent can continue his possession after renewing the terms and condition of house rent.

What you should know about renting?

Most people are indifferent when it comes to following the rules and regulation of renting premises as a result both tenants and landlords can be deprived of their rights. So, before renting a premise you should be aware of the following common issues as per the law:

  1. Main purposes of renting premises i.e. if it is for residential, business or official purpose.
  1. There should be a written agreement between the landlord and tenant. Without this the tenant will be deprived of the benefit he is entitled to get as per law. In our country, most landlords are reluctant to enter into a rental agreement and without any written contract there is a possibility of claiming illegal advantages from the tenant by the landlord and vice versa.
  1. Most importantly landlords have to provide a rent receipt to their tenant in order to keep a track of the amount paid for the respective month or period.
  1. As per the provision of Rent Control Act the landlord cannot increase the rent without any proper cause such as any improvement in the premises or any supply of furniture by the landlord. The amount of rent has to be a standard rent.
  1. The house/premise has to be handed over to the tenant at the time of renting.
  1. Required documents for the preparation of rent agreement
  2. Name and full address of landlord and tenant
  3. Date of execution of the agreement.
  4. Passport size photographs and Copy of NID card of land lord and tenant.
  5. Renting amount and whether it is inclusive of the electricity and water bills.
  6. Fixed rental period of the premises
  7. Terms and conditions of renting for example the tenant will follow all the rules set out in the law and will not carry out any illegal activities in the rented property
  8. Terms as to whether the agreement can be extended for a further period by mutual consent of both landlord and tenant.
  9. Terms related to the requirement of notice and notice period for eviction.
  10. The tenant will have to allow the landlord to enter into rented premises for general checking.
  11. Tenant will bear the cost for minor repairing.
  12. The tenant will keep the premises clean and not involve any act causing problems to others.
  13. The tenant will pay one month rent in advance to the landlord.
  14. Both landlord and tenant have to read and understand the agreement and sign without any pressure.

Powers and duties of a controller

 Government has empowered a controller some specific powers and duties which are as bellows:

  1. To fix standard rate of rent.
  2. He has a power to hear application made to him by any aggrieved party.
  3. He has a power of entering rented premises for general inspection.
  4. The controller will complete the hearing of every application within a period of three months.
  5. The Controller shall, on application made to him by a tenant, cause a notice to be served on the landlord requiring him to make any repairs which a landlord is bound to make to the premises let by him or to take any measures for the maintenance of any essential supply including the maintenance of supply of water or electricity, the maintenance of drainage service and the maintenance of any lift etc.
  6. Before exercising any of the power conferred upon the controller, he will give prior notice to the tenant and the landlord through registered post.

Landlord and tenant: Rights and Liabilities 

  1. Not to increase rent without any causes.
  2. To collect any improvement cost from the tenant after the property let out.
  3. Landlord can collect extra rent from tenant for the payment of increased tax and toll to the municipality, is it is said by the agreement.
  4. To provide a rent receipt to the tenant.
  5. He cannot claim extra premium or salami from tenants.
  6. But landlord can claim premium if the premises leased for a long term , not less than twenty years.
  7. The landlord is bound to pay for the maintenance of supply water, electricity and sewerage services of rented property, as per the provision of written agreement.
  8. He cannot make any illegal ejectment to the tenant without giving him prior notice.
  9. The tenant will follow all the rules and regulations set by the Act and will not involve any illegal activities within the rented property.
  10. The tenant will keep the premises clean.
  11. The tenant has to pay one-month advance to the landlord.
  12. As per the Act, if landlord refuses to accept rent from any tenant it is his duty to deposit such rent within fifteen days by postal authorities on the date of returning the rent. 

Illegal eviction of a tenant

As per the provision of this Act, a Landlord cannot evict a tenant without giving prior notice. But a landlord can evict a tenant without giving prior notice under some special circumstances, which are as bellows:

  • If the tenant has done any act contrary to the provision of the Act.
  • If the tenant has done any act contrary to the sec 108 of Transfer of Property Act-1882.
  • In the absence of any written contract, if the tenant has sublet any premises without the consent of landlord.
  • The tenant has been guilty of any public nuisance of adjoining or neighboring premises.
  • Where the landlord can show satisfactory cause to the court that the premises are bona fide required by the landlord.
  • If tenant has been using the premises or allowing the premises to be other for economic purposes.

Notice serving procedure in the absence of any rental contract:

In case of a rental agreement the notice period for eviction will be mentioned therein. However, in the absence of a contract, the notice giving procedure will be regulated by section 106 of the Transfer of Property Act.

  1. If the renting purpose of immovable property is not residential but agricultural or manufacturing, if it is terminable year to year then, six months’ notice will be served expiring with the end of a year of tenancy.
  2. In the case of residential purpose, if it as terminable month to month then fifteen days’ notice will be served expiring with the end of a month of tenancy.
  3. Every notice must in writing. It will sign by landlord and tenant both. It will deliver by post or personally.

Payment of taxes and duties for house property

Generally, landlord will pay the increased amount of taxes. As per the provision of written agreement, tenant will be allowed to pay the increased amount of taxes to the landlord by mutual consent. However, as per the provision of Income Tax Ordinance 1984 some rules regarding payment of taxes for house property are as follows:

  1. where the property is mortgaged tax will be paid by the mortgagor.
  2. if the property is held under trust tax will be paid either by trustee or beneficiary.
  3. if the property is leased for long time, lessee is to pay tax.
  4. where the owner of house property become insolvent, official receiver will be liable to pay tax.
  5. where house is owned jointly and share is identifiable, each co-owner will pay taxes for their own share.

Condition for tax assessment:

As per the provision of Income Tax Ordinance-1984 a house property need to fulfill the following conditions for tax assessment:

  1. For tax assessment, assesse must be legal owner of the house.
  2. Income must come from the house property and its adjacent premises.

3 .For assessment Annual value of the house property is  to be determined.

 Computing annual value from house property:

Section 24 of Income Tax Ordinance 1984 provides that tax on house property will be charged on the basis of Annual value of the house. In determining the Annual Value of the house, two things will be considered i.e.-

[ 1] the sum of estimated annual rent

[2] The sum of actual annual rent.

The higher one.

So, AV=   Estimated annual value or Actual rental value, whichever is higher

 Tax deduction of house property:

As per the provision of Income Tax Ordinance 1984 following expenditure will deduct from tax computing of a house property:

1 .A fix amount of one fourth of annual value of house property will deduct as a repairing charge from tax calculation.

  1. Paying of insurance premium for the house property is allowable expenditure.
  2. Paying of land revenue will be allowable expenditure.
  3. Tax payable to municipality will consider as an allowable expenditure.
  4. If the house property is mortgaged, mortgaged interest will consider as an allowable expenditure.
  5. Interest on borrowed money for the purpose of acquiring, repairing, constructing of residential house property will deduct up to 20 lakh taka.
  6. If the house property is vacant for a long time and it become losses, the vacancy allowance will deduct from computing tax.

 House property Exempted from tax calculation:

 Property income used for religious or charitable institutions will be exempted from tax calculation.

  1. Income of the property used for agriculture purpose by the owner.
  2. Income from newly constructed house as follows period of ten years.
  3. Using of house property in business purpose, if the income of business is assessable separately under the head of “Income from Business

Penalty Provisions for violating the legal obligations under the Act

As per the provision of rent control Act, there is a penalty system for violating rules which are as follows:

Penalty for recovering in excess rent:

If any person receives extra rent from tenant, for the first time he will fine a amount twice in excess of standard rent.  And every subsequent occasion he will fine three times   in such excess. Moreover, if anyone receives extra salami, premium, security he will fine two thousand taka on first occasion. But every subsequent occasion will fine extending to five thousand taka. In addition, if anyone receives more than one month’s rent in advance without out written consent of controller will fine a amount twice in excess of one month’s rent.

Penalty for disturbance of easement rights:

Making   willful disturbance of easements to others annexed to such premises is violation of Act. If anyone do such a thing, the aggrieved party can file a complaint to the controller. The liable one has to pay five hundred taka as a fine on his first occasion. And every subsequent occasion the fine may extend to one thousand taka.

Penalty for giving incorrect name or address of the landlord:

A tenant willfully gives an incorrect name and address of landlord will be liable to a fine extend to five hundred taka.

Penalty for tenant’s failure to explain the possession of premises:

Every tenant fails to make over vacant possession will be liable to a fine extend to ten times the standard rent of the premises.

Penalty for failure to grant receipts:

If a landlord fails to deliver to a tenant a written rent receipt will be liable to a fine twice the amount recovered.

Filing of complaints:

As per the provision of the Act,   an aggrieved person has to file a complaint in written form to the controller. However, after inquiring every complaint, the controller shall impose punishment referred to in said   section. The fine shall be paid by the person in a prescribed manner within thirty days from the date of order imposing it. Otherwise, it will be recoverable as a public demand under the Public Demands Recovery Act.

Provision of Appeal:

Any aggrieved person by the order of the controller, may file an appeal to the district judge within thirty days from the date of the order. The decision of district judge and subject to the said decision an order of controller shall be final. 

If you want to know more about the relevant topic, please visit:

Landowner & Real Estate Developer: Rights and Liabilities

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