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Chandigarh: Only 4% leasehold properties find buyers
The Chandigarh Housing Board had put up 38 dwelling units and 151 commercial properties on auction; was able to get bids for only five and three, respectively
Similar to its previous attempts at selling leasehold properties, the Chandigarh Housing Board (CHB) has failed to get a positive response in its latest auction on Tuesday. Out of 189 leasehold properties on offer, it got buyers for just eight.
The housing board had put up 38 dwelling units and 151 commercial properties on auction.
In all, 15 e-bids were received for just five residential units. Their cumulative reserve price was ₹2.46 crore while the highest bids for these units totalled ₹2.77 crore. Three commercial units also found takers with five bids in all.
“The board has received about 12.6% above the reserve price for residential units and about 6.5% above the reserve price for commercial units,” said Yashpal Garg, chief executive officer (CEO), CHB.
Few takers for leasehold properties
The CHB, in the past four months, has conducted four e-auctions for its 121 freehold residential properties and has been able to sell 87, earning ₹70.59 crore.
In the same period, excluding the Tuesday auction, it has been able to sell only two residential and nine commercial leasehold properties, earning ₹1.74 crore and ₹4.73 crore, respectively.
The CHB is selling those properties on leasehold that are constructed on the land allotted by Chandigarh administration on leasehold basis. Similarly, the residential properties constructed on the land allotted on freehold basis are being sold on freehold.
“In leasehold properties, the allottee is required to pay a yearly ground rent at the rate of 2.5% of the consideration amount for 33 years, followed by 3.75% for next 33 years and 5% for the subsequent 33 years. Since this is a substantial amount and ownership rights are inferior than in the case of freehold, people prefer to go for the latter properties,” said Garg.
Also, the conversion of leasehold property to freehold is a costly affair. “The conversion charges for residential properties may range from 12% to 15% of the consideration amount. However, the conversion is not permitted in the case of commercial properties,” said the board CEO.
UT urges Centre to allow conversion
The Chandigarh administration has once again written to the Centre for its approval to allow conversion of leasehold properties to freehold in the case of commercial and industrial plots. Earlier, it has sought the approval in April this year.
Around 70% commercial and industrial plots in the city are leasehold. The ownership rights are with the government agencies, such as the UT estate office, municipal corporation and the CHB.
A large number of them are lying vacant as there are no takers for leasehold properties, and the administration is losing crores of rupees in revenue.
