For housing societies, state to reduce premium for converting govt plots to freehold

The state government is considering reducing the premium for converting government land to freehold from 15% to 5% for housing societies going for self-redevelopment. The revenue department is working on a proposal that will be presented to the cabinet for approval. This comes after elected representatives from Mumbai urged the government to lower the premium to 5%. The revenue department is concerned about the potential revenue loss. The government had previously extended a scheme allowing tenants to own government plots by paying 15% of the ready reckoner rates.

The state government is likely to further reduce the premium – from the current 15% to 5% of the ready reckoner rates – being charged for converting government land to freehold, although the concession will be limited to housing societies going for self-redevelopment. The revenue department is working on a proposal which will soon come up before the cabinet for approval, people aware of the matter said.

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The state in February extended a scheme by two years, till March 2024, under which tenants on government plots that are allocated either on lease or occupancy class II (conditional ownership) can own them by paying only 15% of the ready reckoner rates.

The elected representatives from Mumbai have been urging the government to bring the premium further down to 5%. The issue was raised in the assembly by legislators, especially from BJP.

The revenue department, however, is not in favor of such a decision as it will cause a huge revenue loss. “The government has already extended a concession by reducing the premium to 15% and that too as per the ready reckoner rates, which is almost half of the prevailing market rates. Bringing it further down to 5% means giving away the government properties at throwaway prices,” a senior official, who did not want to be named, said.

“We are considering reducing the premium to 5% from 15%. But the concession will be only for those housing societies who are ready for self-redevelopment,” another revenue department official said.

The conversion scheme was introduced by the state government in 2019. For the plots given on occupancy class II (conditional ownership) and for residential use, the tenant would have to pay 15% of the total price of the property as per the ready reckoner rates but if it was allotted on lease then the tenant would have to pay 25% of the ready reckoner rates.

The state government is also promoting self-redevelopment of cooperative housing societies. On August 31, it issued a government resolution announcing a single window clearance system for such proposals within three months from the date of their submission.