Why Government Regulations often fail?
Tamil Nadu has the Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act of 2017. Also, Tamil Nadu passed the Tamil Nadu Apartment Ownership Act 2022. They provide guidelines for respective domains. They expect a registration with the government. A web-site exists for all these and very few residents and apartment associations are even aware of these acts. Nevertheless, properties are being rented out and associations continue to function.
The act pertaining to tenancy states that the deposit cannot be more than three months of rent. This is not followed by most owners, but tenants agree to pay a higher security deposit. The demand overrides the government regulation. This implies that neither the owners nor the tenants take the act seriously.
A mandate like these from the government has at least one clear goal - to intervene in case of a dispute or a violation. Why do people ignore such mandates and proceed with their way of dealing and transacting?
- Citizens estimate a risk of dispute or a violation to be a minor one or they totally ignore it.
- Even if they encounter an issue, they find it easier to resolve it without the government intervention.
- The cost of involving the government in resolving such issues is far too high than the cost of settling it between the individuals.
- People are more comfortable dealing with humans than a faceless system that does not add much value.
- There are cheaper higher powers that will help in the resolution quickly than any government agency. Some of them aren't strictly legal.
- The government has no way of enforcing its own laws. It lacks the resources like people, and administrative systems for dispute resolution.
Overall, people are less inclined to let the government as an intermediary between two individuals. While renting and associations are good for society (optimum use of housing, cooperation etc), the government has no skin in the game to involve itself in the transactions and seen as a useful party in the transaction. That is, the government is not equal to society or the state's formal legal institutions are disconnected from the organic, informal mechanisms society relies on to resolve daily disputes.
Are we good with our current system of ignoring the government for such transactions? Would a smaller local government be of any use in such cases?
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