The Hindu Business Line : Free-hold land: Delhi may reap Rs 500 cr

THE decision to allow lease-hold land to be converted to free-hold property in Delhi could add over Rs 500 crore to the State Government's kitty and make buying or selling property in the Capital simple and more transparent. On the flip side, the scheme may not take off for industrial and commercial plot owners as most properties are mortgaged with banks.

The Union Cabinet decided to allow lease-hold land to be converted to free-hold at meeting on Monday.

For the first time, commercial and industrial units have also been allowed to get free-hold status. When the scheme was launched for residential units earlier, the Delhi Government had gained Rs 455 crore.

According to industry analysts, owners of very few industrial and commercial units are likely to opt to free their property by paying 10 per cent of the value of the land.

"It may sound perverse, but most of the 13,000 industrial and 10,000 commercial plots are mortgaged with banks or financial institutions. Going free-hold would make it easy for banks to attach these properties in the event of default. Lease-hold property gives the owners a cushion as the bank has to go through a tedious process of obtaining permission from the Land Development Office," according to an industry source.

The residential scheme may find more takers as it does away with the menace of Power of Attorney deals. As of now, home finance institutions and banks do not give loan for a property that is being sold for the second time on Power of Attorney.

"With residential properties going free-hold, there would be no need for taking the convoluted Power of Attorney route to buy a house. Home loans would be easier to get and the Government would gain revenue each time the property is sold and registered in the name of the new owner," said Omaxe Construction Ltd General Manager (Real Estate Division), Mr Abdul Bari.

As per the Cabinet decision, even properties sold on Power of Attorney would be allowed to become free-hold by paying a 33.3 per cent surcharge on the conversion charges.

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