DNCC Rent Control Will Cause More Problems Than It Solves

A few days ago, when the Dhaka North City Corporation (DNCC) authorities announced that they would take practical steps to control house rent in the capital, it brought hopes of relief in the minds of countless tenants in Dhaka.

Although some new legal questions and fears of further rent hike have arisen after announcing detailed guidelines by DNCC Administrator Mohammad Azaz.

Earlier, in the wake of a writ petition, the High Court Division of the Supreme Court issued a rule to prepare a policy for determining house rent by the Dhaka North and South City Corporation authorities and those concerned.

However, the purpose of the DNCCs house rent guidelines should have been to establish some balance and fairness in an uncontrolled market. Now that has created new complications in terms of legal validity and practical applicability.

The biggest concern is the provision of maintaining the existing annual rent increase rate of not more than 15 percent of the current market value of the property. It will ultimately act as a license to skyrocket the rent.

Most of the instructions given by the DNCC are against the interests of both the landlords and the tenants, are chaotic, unreasonable and illegal.

Although the DNCC guidelines emphasize on discussions with tenants on various issues, it does not seem that the DNCC authorities themselves discussed and took opinions from all concerned before preparing the guidelines.

Even if they did, it appears that they have issued an unplanned guideline of their own accord without including those recommendations.

For example, clause 4 asserts that the landlord will give the keys of the roof and the main gate to tenants subject to conditions. But there is no guidance on what the conditions may be or what the considerations will be in determining the conditions.

Further, clause 5 of the guideline states that the tenant will pay the rent to the landlord by the 10th of the month. However, according to the House Rent Control Act, 1991, in the absence of a contract, the rent is to be paid within the fifteenth day of the following month. As a result, the legal rights of the tenants have been violated here.

Again, clause 7 provides that the time for increasing the rent will be June-July. In reality no tenant will definitely wait for the months of June-July to rent a house.

In that case, if someone rents at other times of the year, the landlord cannot increase the rent if the two-year period lapse not in June-July, which is not a logical rule at all and is against the interests of the landlord.

On the other hand, clause 9 of the guidelines stipulates that a tenant can be evicted if he/she fails to pay rent on time. But Section 18 of the Act has added some more grounds and clarified in which circumstances the landlord can and cannot evict a tenant.

As a result, there is a fear of loss of interest of both the landlord and the tenant in this regard.

Moreover, clause 13 has gone beyond the law and determined that the landlord can take one to three months’ rent in advance. Although the Rent Control Act made it maximum of one month.

Therefore, it creates opportunity to ask for an additional advance from the tenants. As a result, it is not at all clear whose interests this guideline will actually protect.

On the other hand, there is no mention of how the obligations imposed on the homeowner or tenant will be ensured or held accountable, or who will take care of them. Most importantly, what will be the consequences if someone does not comply with these? And does the DNCC have any legal power or practical ability to implement this directive?

In addition, other administrative structures required to implement the guidelines are inadequate; for example, ward-based owners and tenants’ associations and the arbitration system through them are not prevalent in our system.

Therefore, the possibility of arbitration being effective without clear legal provisions is low. Overall, the directive is largely advisory;

its legal basis and practical implementation framework are both extremely weak.

In reality, the House Rent Control Act, 1991 is ineffective in Bangladesh. Rules have not been formulated even today; the regulatory post has been vacant for decades. Interestingly, the provision of increasing the rent by up to 15 percent yearly (after the first two years) is within section 15 of the Act and the DNCC, as a local authority, does not have the power to amend it.

The main problem with the House Rent Control Act, 1991 is that there is no clear and realistic method for determining the market price. Although both the law and guidelines mention about the standard rent determination; but the detailed method and considerations for such standard rent determination is not provided.

Adopting a rational approach to rent control (such as setting realistic maximum annual percentages based on area and amenities and revising them from time to time), ensuring monitoring and accountability, establishing strong, independent and accessible dispute resolution body (such as a House Rent Tribunal or Board), awarding costs to the winning party, etc are urgent at this moment to uphold the interest of both the homeowners and tenants.

The government should therefore now introduce a fair rent determination system that takes into account the local market analysis, the quality of the building, the amenities provided, the area, the quality of the civic services, the liveability and the income capacity of the tenant, instead of the existing 15% of the market value.

Additionally, bringing the necessary amendments to the House Rent Control Act, 1991 immediately; formulating rules under the Act; creating the post of rent controllers in every city corporation and municipality and appoint the necessary number of officers; establishing a separate dedicated body to resolve housing rental disputes; strictly implement and monitor the provisions of the law etc., are obvious now.

Dhaka’s tenants, who are one of the backbones of the city’s economy; have long been victims of neglect, deprivation and exploitation. An effective and fair rent determination requires a realistic and strong legal framework; so that the rights of both parties are specific and a speedy redressal process is within everyone’s reach.

The government and the local authorities must focus on establishing a quickly implementable, balanced and transparent legal framework, not an imaginary policy. Otherwise, this guideline will remain on paper as always, and homeowners and tenants will bear the consequences. Now is the time to ensure a modern, up-to-date and humane legal protection for the housing market of the country.

Raisul Sourav is a Doctoral Researcher in Law at the School of Law, University of Galway, Republic of Ireland; an Equality and Rights Activist and a Law  Justice Analyst. Email: [email protected].