Chavan junks British-era land leases, rentals now at market rate

If you are a leaseholder of a prime property in South Bombay but got the luxury of paying a measely Rs 100 a year, even though the flat was worth crores, here’s some bad news for you!

Six months after a CAG report pulled up the Maharashtra government for not having a policy for renewal of leased public land, Chief Minister Prithviraj Chavan has decided to junk British-era land lease laws and introduce new ones that are in sync with the prevailing market rates.

[caption id=“attachment_485699” align=“alignleft” width=“380”]  Chief Minister Prithviraj Chavan has decided to junk British-era land lease laws and introduce new ones that are in sync with the prevailing market rates. Reuters[/caption]

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The state government has revised lease rentals of a total of 1,577 lands situated in the Mumbai city and suburbs. The revised lease rentals, which are fixed on ready-reckoner rates, would be effective from January 1. The only relief here is that Chavan will not slap the ongoing market rates fully. Rental for residential purpose will be 20% of the ongoing rate, for industrial purpose it will be 25%, and for commercial use it will be 30%.

Chavan has identified 1,282 properties on lease in Mumbai city, of which the lease of 517 has expired, while in the suburbs there are 295 properties and the lease of 149 has expired.

Most of these leases were given during the British Raj for 50, 99 and 999-year periods and over the years, the rent of these properties has remained unchanged. Currently the government only earns Rs 6 crore from these long-term leases.

However, from now on the long lease will not be extended to more than 30 years. Due to the revision in lease rentals, the total revenues to the state exchequer have been pegged at around Rs 500 crore.

The new rules will be applicable only to those whose lease has expired and who are planning to renew their leases. The government will scrutinise every property/flat/house that comes up for renewal. The annual rates will be reassessed every five years.

“Some have expired in the 1970s and 90s and amount of rent needs to be reviewed when they come up for renewal. In Colaba area of south Mumbai, government gets a Rs 17.71 as rent for a 570 sq m land while for a 3,070 sq m land, the rent is only Rs 74.49 annually. This is not acceptable,” Chavan said on Wednesday. Under the new law the Colabla property will generate at least Rs 3 lakh in rent per annum.

While the move is surely going to fill up the government’s coffers, questions remain over the misuse of land.