According to the Model Tenancy Act, 2021, landlords can collect a maximum security deposit of two months' rent for residential premises and six months' rent for commercial tenancies. However, as reported by Mint, the Act's application varies by state, with Delhi continuing to follow market conventions and relative bargaining power between parties. Supreme Court advocate Tushar Kumar noted that such practices must not be unfair, unreasonable, or against public policy, with factors including property location, furnishing, tenant profile, and prevailing market norms influencing deposit amounts.
According to Supreme Court Bar member Harshal Dilwali, landlords can legally deduct costs for actual damage beyond normal wear and tear, unpaid rent, or utility dues. As reported by Mint, normal wear such as minor scuffs, faded paint, or routine aging cannot be charged to tenants, while excessive damage like broken fixtures, deep stains, or negligence can justify deductions. Additional charges for renovation work, such as painting or cleaning, are valid only if explicitly agreed in the rental contract or if the tenant leaves the property in significantly poor condition.
Under the Model Tenancy Act 2021, landlords must return security deposits within one month after tenant vacates the premises, subject to legitimate deductions. According to Mint reports, in areas where the Act is not enforced, timelines depend on the rental agreement. For commercial properties, deposits must be returned within 15 to 30 days after vacating, unless the lease agreement specifies otherwise. Supreme Court advocate Tushar Kumar emphasized that proper documentation and move-out inspection can significantly strengthen a tenant's case.
When landlords refuse to return deposits or make unfair deductions, tenants can approach the Rent Authority under the Model Tenancy Act 2021 or file complaints in civil court. As reported by Mint, tenants should first raise issues formally with evidence including photographs, payment receipts, and rental agreements. Legal notices through lawyers are often effective, with the burden resting on landlords to justify deductions with cogent material, failing which retention is liable to be construed as unjust enrichment.
