Will Maharashtra government succeed in revising rates for leased plots this time?

The government tried to revise rates in 1983, 1999 and 2012, but failed each time. Now it’s trying again

The Maharashtra government has been trying to revise rates of its leased out plots in Mumbai for more than three decades but has failed each time. The most recent failed attempt was when the state government withdrew its policy formulated in December 2012 and came out with its revised version by rolling out concessions to various classes. The first attempt was made in 1983. Since then, the state tried to increase the lease rates of government-owned plots twice, in 1999 and 2012, by formulating different policies each time. But these could not be implemented following litigations.

The government’s attempts to revise rates for leased out plots has been caught up in litigation. (HT FILE)

On April 24 this year, the state government again decided to reduce the annual lease rates by half (one percent of 25% of the market price) for the cooperative housing societies situated on government-owned plots in Mumbai. The same was made applicable for individuals using plots of not more than 500 square metres for residential purpose. It has also decided that the annual lease of government plots being given for social, cultural, charitable and religious purpose would be reduced by more than half (0.5% of the 25% market price) from the existing lease rates defined in the policy formulated in December 2012. The lease rates for plots being used for commercial and industrial were not changed.

The decision was taken considering various litigations filed in the Bombay high court challenging the lease land rates policy formulated in December 2012. As a result of the litigations, the policy could not be implemented effectively. Lease agreements of only 11 plots were renewed as against 832 expired agreements of leased out plots, as on January 1, 2018.

Officials in the state government confirmed that they have been struggling to implement revise lease rates since 1983.

In December 1983, the state government determined the lease rates at 6.5% and 8% of the market value, if the lease agreement is due for renewal by May 16, 1978 and after the date respectively, says a government resolution issued by the state revenue department on December 12, 1983.

In another policy formulated in 1999, the lease rates were brought down to 1% of the market value for plots being used for residential and charity purpose, 2% for industrial purpose and 2.5% for commercial purpose. But both the policies were challenged and could not be implemented. The policy brought on October 5, 1999 was withdrawn by the state government in November 2006 after the Bombay high court pointed out that the lease rates of the plots cannot be based on market value of the plots, said a senior official requesting anonymity.

Ramesh Prabhu, a housing activist, said determination of lease rates based on market value of the plot is the basic problem with the policies formulated so far. “The government has already recovered cost of the plot as premium from the lessee while leasing out the plot. The plots were given on nominal lease as there was no policy for allotting government plots on ownership basis then. Now, it’s unfair on part of the government if it wants to charge lease rates based on market value of the plot,” Prabhu said.

In Mumbai, there are around 1,700 government plots that have been given on annual lease. Of them, 1,307 plots come in city limits while 356 are in suburbs.