4 min readChandigarhMay 7, 2026 07:16 PM IST
In a major legal overhaul aimed at bringing greater transparency and ease to the rental housing sector, the Centre has extended the Assam Tenancy Act, 2021 to Chandigarh, replacing the decades-old East Punjab Urban Rent Restriction Act, 1949 with a modern framework governing residential and commercial rentals.
Notified by the Ministry of Home Affairs under Section 87 of the Punjab Reorganisation Act, 1966 through a Gazette notification issued on May 6, 2026, the new law introduces stringent penalties for tenants overstaying beyond the tenancy period, caps security deposits, makes written rent agreements mandatory and clearly defines the rights and duties of landlords and tenants.
UT officers said the move was aimed at improving ease of living, formalising rental arrangements and balancing the interests of landlords and tenants through a structured legal framework. The law is expected to significantly alter the way rental properties are managed in Chandigarh while reducing tenancy-related disputes.
One of the most striking provisions is a steep financial penalty for tenants who continue to occupy premises after the expiry of tenancy. Such tenants will be liable to pay double the monthly rent for the first two months of unauthorised stay and four times the monthly rent thereafter until the property is vacated.
For instance, if the agreed monthly rent is Rs 20,000, an overstaying tenant would have to pay Rs 40,000 per month for the first two months, rising to Rs 80,000 per month thereafter until vacating the premises. The provision is aimed at discouraging prolonged unauthorised occupation, a long-standing grievance of landlords under the earlier rent-control regime.
The law also makes written tenancy agreements compulsory. Landlords and tenants must jointly inform the Rent Authority about the agreement within two months of its execution. In case of failure to do so jointly, either party may separately submit the details within an additional month. A digital platform will also be created for online submission and management of rental documents, bringing tenancy agreements into a formal regulatory system.
To protect tenants from excessive upfront demands, the law places a cap on security deposits. For residential properties, landlords cannot charge more than two months’ rent as security, while for commercial or non-residential premises, the limit has been fixed at six months’ rent.
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The Act lays down clear responsibilities for both landlords and tenants regarding payment of rent, maintenance and repairs, while requiring both parties to maintain premises in good condition, barring normal wear and tear. It also bars landlords from arbitrarily cutting off essential services such as water, electricity, sanitation, security arrangements, parking access and lift facilities. In such cases, the Rent Authority can order immediate restoration of services and award compensation to the tenant.
The law further regulates landlord access to rented premises. Landlords or property managers can enter only after giving at least 24 hours’ notice, except in emergencies such as fire, flood or natural disasters. Entry will generally be permitted only between sunrise and sunset for repairs, inspection or other legitimate purposes specified in the tenancy agreement.
Subletting has also been tightly regulated. Tenants cannot sublet a whole property or any part of it without a supplementary written agreement and prior intimation to the Rent Authority.
To ensure quicker resolution of disputes, the law establishes a three-tier adjudication mechanism comprising the Rent Authority, Rent Court and Rent Tribunal. In Chandigarh, the Deputy Commissioner, with the approval of the Administrator, will appoint officers not below the rank of Tehsildar as Rent Authorities.
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The Act also spells out grounds for eviction, including non-payment of rent, misuse of premises, unauthorised structural changes, illegal subletting, reconstruction or redevelopment needs, and genuine requirement of legal heirs after the landlord’s death or sale of property where possession becomes necessary. However, tenants may avoid eviction in certain cases by clearing rent dues within the stipulated period after notice.
While the new law repeals the East Punjab Urban Rent Restriction Act, 1949 in Chandigarh, all cases already pending under the old law will continue to be heard and decided under the previous legal framework.
