Noida Authority approves proposal to convert leasehold property to freehold
For residential properties Noida authority approved a proposal that seeks to convert leasehold property into freehold.Updated: Nov 02, 2018 13:10 IST
Hindustan Times, Noida
The Noida authority in its board meeting approved a proposal that seeks to convert leasehold property into freehold status on Thursday — a move that will benefit owners of property by allowing redevelopment and allowing them to pass on the benefit of ownership to further generations, but which could put pressure on existing civic infrastructure if the redevelopment results in an increase in population, according to experts.
For starters, the authority wants to restrict the conversion to residential properties. All properties of all types in Noida are currently leasehold, which means the ownership is for a period of 90 years. The sale and transfer of leasehold properties requires the authority’s approval.
Residents welfare associations, Noida industrialists’ bodies and other groups have been demanding the conversion of all properties into freehold for some time.
“We conducted a survey on impact of freehold from leasehold. An agency Ernst & Young submitted a report on positives and negatives of conversion from leasehold to freehold. Later an internal committee of the authority also deliberated on the survey report. Today the board has decided to send a report to the UP government for further approvals,” said Alok Tandon, CEO of the Noida authority.
The board has authorised the CEO to prepare the report. “We will study the report and send it in the next 3-4 days,” said Tandon.
The Ernst & Young team also studied whether the conversion – such conversions usually happen at a cost, a fraction of the value of the property – would help the authority generate more revenue which can be used for development and maintenance.
“It the conversion happens, we can earn a revenue of around ₹3,000 crore provided the residents opt to convert their property from leasehold to freehold,” said Tandon, adding that the board’s report would also list the negatives of the proposed change so that the government can take an informed final call.
Experts aren’t sure whether the move will increase property rates.
Santhosh Kumar, vice chairman, ANAROCK Property Consultants, said: “While the conversion of property ownership is a welcome move, there won’t be any material impact on property pricing because of the existing oversupply in the market and the currently dampened buyer sentiment on account of project delays in this region.”
Freehold property owners can make decisions on structural changes that may be needed in their projects. “Under the leasehold model, projects cannot be redeveloped. The freedom to go in for redevelopment will serve to extend the value of property ownership beyond the life-cycle of the building,” Kumar added.
However, freehold status will also allow floor-wise registration in plotted housing, thereby leading to higher population density.
“The move will have its positive impact and also negative ones, especially on civic facilities as the infrastructure is planned for less population. The authority will have to spend funds to develop required infrastructure to cope with population pressure,” said Rajpal Kaushik, retired chief architect and town planner of the Noida authority.
Planners fear that Noida, a planned city, could become another Ghaziabad if the properties are converted from leasehold to freehold. “The move will make Noida another Ghaziabad because people will misuse the freehold status. In all cities, where the property is freehold, the people misuse it, and it leads to haphazard development,” said Atul Gupta, president of the Noida architects association.
First Published: Nov 02, 2018 13:00 IST