Chandigarh Replaces 77-Year-Old Rent Law With Modern Tenancy Framework, Imposes Overstaying Penalties

The Centre has introduced a major legal overhaul in Chandigarh’s rental housing sector by extending the Assam Tenancy Act, 2021, to the Union Territory, replacing the decades-old East Punjab Urban Rent Restriction Act, 1949. The move, notified by the Ministry of Home Affairs through a Gazette notification issued on May 6, 2026, is aimed at modernising tenancy regulations and creating a more transparent framework for residential and commercial rental arrangements.

The new law introduces several significant changes, including mandatory written rent agreements, limits on security deposits, and stricter penalties for tenants who continue occupying properties after the expiry of tenancy periods. Officials said the updated framework seeks to balance the interests of landlords and tenants while reducing disputes related to rental properties. Authorities also described the legislation as part of broader efforts to improve ease of living and formalise rental housing practices in Chandigarh.

Under the revised tenancy framework, landlords and tenants will now be required to enter into legally documented agreements specifying rent amounts, duration of tenancy, and other conditions. The law also places restrictions on the amount landlords can demand as security deposits, a provision intended to prevent excessive upfront financial burdens on tenants. Officials believe the introduction of written agreements could help reduce misunderstandings and provide stronger legal clarity in case of future disputes.

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One of the key features of the new law is the provision for stringent action against overstaying tenants. Authorities have introduced heavy penalties for occupants who fail to vacate premises after the agreed tenancy period ends. The legislation also includes mechanisms for faster resolution of disputes between landlords and tenants through designated authorities and legal procedures aimed at avoiding prolonged litigation, which has traditionally burdened the rental dispute system.

The Centre extended the law to Chandigarh under Section 87 of the Punjab Reorganisation Act, 1966, allowing the Union Territory to adopt legal provisions from other states where appropriate. Officials said the decision was taken after examining the growing need for a modern rental framework capable of addressing changing urban housing patterns, rising property values, and increasing demand for rental accommodation in the city.

The replacement of the East Punjab Urban Rent Restriction Act, 1949, marks one of the most significant tenancy reforms in Chandigarh in decades. Legal experts believe the updated framework could reshape the functioning of the city’s rental market by improving accountability, formalising agreements, and strengthening enforcement mechanisms. However, some observers note that the effectiveness of the law will depend on implementation, awareness among property owners and tenants, and the efficiency of the newly established dispute resolution systems.

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