Navi Mumbai: Some strange norms in the state government's leasehold land policy have virtually halted the sale of flats in many part of south Mumbai.
One of the rules says if a non-government employee wants to buy a flat with a carpet area of 300 sq ft, his monthly income should not exceed more than Rs 8,000. Similarly, for a 450 sq ft flat, his income need to be between Rs 8,000 and Rs 12,000. For a 650 sq ft flat, his income should not be more than Rs 20,000.
"With a monthly salary of Rs 20,000, it's highly impossible to buy a property in South Mumbai. A 2BHK in areas like Worli and Prabhadevi costs no less than Rs 2 crore. Earlier, government officials were not strict about these rules. Now, they are and flat owners are not getting market price," says Kailash Patil, a real-estate broker.
What is leasehold land?
Real property held by a tenant (lessee) under a lease for a fixed term, after which it returns to the freehold owner (the lessor). The term of the lease varies. There are about 3,500 housing societies, developed on government leasehold land in Mumbai.
What is the rationale behind the salary norm?
According to an official from the collectorate, these rules were framed to discourage people from selling flats on government leasehold land. He admitted that the rules are not based on ground reality. Mumbai city collector Shaila A was not available for comment.
So, no sale is happening at all?
The collectorate official said many people are selling and buying flats in leasehold land. One flat owner said these people do so by submitting fraudulent documents. "Will the government revoke their permissions? It should be probed," he said. The process of transferring flats are also complicated and lengthy, he said.
What is transfer fee?
The seller also has to pay a certain transfer fee to the government to get a transaction approved. For a 450 sq ft flat, it is 10%, and 15% for a 650 sq ft flat. If it is more than 1,000 sq ft, the seller has to pay 20% of the total transaction to the government.
What are realty experts saying?
Pankaj Kapoor, MD of real-estate research firm Liases Foras, says the government's ready reckoner rate itself is higher. "The government should look at its own backyard while drafting policies. Realty prices are set on the basis of locations. They should be fixed with an urban setting in mind. By framing such nonviable policies, the government is setting a wrong precedent."
What is the way out?
Manohat Shroff, chairman of the Shivam Developers, suggests that the government should acquire these flats through market price or a reasonable price and sell it through the Mhada lottery system. "The state restrictions are ridiculous. Government should acquire the land and give it to developers to redevelop and sell it through pubic auction. It can also increase the transfer fee if it wants to increase revenue," said Shroff.