A Study on Effectiveness of Ejectment & Demolition Order Provisions Made Under Rent Act No: 7 of 1972 & Its Amendments for Rent Control Properties Case study in Colombo City

Abstract

Rent control is a one way of government intervention on property market transaction by introducing ceiling on rental income of tenanted property for addressing housing shortage and protect tenant rights from landlord's monopolistic behavior. Rent control policy on tenanted property in Sri Lanka was implemented by the Rent Act No. 07 of 1972. Due to this rent control Act, open market value of these rent control properties does not reflected and highest and best use value could not be achieved. Subsequently government enforces some changes to principal enactment to allow development of those properties. The Amendments Acts 1980 & 2002 gives opportunity for redevelopment of rent control properties by ejectment of the tenant or demolition of the building. Most of instance tenant does not agree to vacate or landlord does not agree to pay tenant. In that cases landlord cannot get vacant possession and could not redevelop their properties. Under this background this thesis aims to study on effectiveness of demolition and ejectment order provisions made under rent act.

Data collection for this study was carried within the Colombo Municipality. Data collected as number of applications submitted to the National Housing Commissioner under demolition and ejectment order relates to the Colombo city. Objectives were achieved by using descriptive analysis with inferential analysis. Proportionate test, Mann -Whitney test and Chi square test were used as inferential analysis. This study is founded that 51% of demolition case were settled and 49% demolition cases were unsettled while 26% ejectment cases were settled and 74% ejectment cases were unsettled. Among these settled demolition cases, 35% of cases were settled by paying compensation as per rent act and rest of them were settled by mutual settlement. These mutually settle amounts are greater than compensation paid as per rent act amounts and its variance is about 198.6%. This settlement procedure was occurred for demolition cases but not for the ejectment cases. Normally demolition and ejectment cases were settled within three years period but unsettled cases kept as outstanding approximately six years for demolition cases and approximately nine years for ejectment cases. Measure of effectiveness of demolition and ejectment order procedure for rent control properties it is founded that this procedure is effective for demolition cases while it is ineffective for ejectment cases. In addition to that it is founded efficiency of demolition and ejectment order procedure is depended on landlord willingness to pay compensation factor with landlord response on time consuming, regularize, costly procedure factors and entire tenant's response factors. Therefore it is suggested that to change current compensation offered by rent act by increasing current compensation amount or providing alternative accommodation. It is better to determine market value based on bare land value or redevelopment value instead of market value based on existing use value at present. That market value better to apportion as 50% to landlord share and 50% to tenant share.