Track2Realty: The Maharashtra government has revised lease rentals of a total of 1,577 lands situated in Mumbai city and suburbs. The revised lease rentals, which are fixed on ready recknor rates, would be effective from January 1. State cabinet chaired by Prithviraj Chavan gave its approval at its meeting held on Tuesday, Oct 9.
A number of these lands have been allocated at nominal rents for lease terms that extend to 90, 99, and 999 years. Some have even been allocated in perpetuity. These include lands allotted to various gymkhanas (most of them situated in South Mumbai), hospitals, and educational and religious trusts, housing societies, business houses, among others. The government is expected to get well over Rs 500 crore due to the revision in lease rentals.
As per the cabinet decision after taking into consideration 25% share of the government as a lessor 2% lease rental would be charged on residential, 4% on industrial, 5% each on commercial and residential/commercial mix properties. The renewal of lease rentals has been done for next 30 years and it would be increased by 25% after five years.
Further, lease rentals have been proposed for lands wherein they would be converted into occupancy right from lease rental. Lands, whose lease was either over or it would end in next 10 years, would be entitled for such conversion. Residential properties would now have to pay conversion fee of 20% of the market rates, 25% of the market rates for industrial, 30% of the market rate for commercial properties. In case of residential and commercial mix properties the conversion fee would be based on area under usage.
Chavan made announcement in this regard at the CII’s National Council meeting and later at the press conference. He informed that these lands were given on lease rentals at a time when there was comparatively less demand for land in Mumbai. “The lease rentals in some cases is Rs 45 per annum, Rs 100 per annum. This is quite low compared to present prices of properties in the city. There has been 921.91% rise in the value of lands in last 80 years in Mumbai,” he noted.
The proposed increase of rent and the premium of granting long term leasehold lands on freehold basis would be the matter of bargain during the process of hearing. After giving hearing, government is at liberty to keep the lease rent as proposed.
Chavan recalled that the government had released a policy to revise lease rentals based on market rates in October 1999. However, it was subsequently challenged in the Bombay high court. The government withdrew its decision in November 2006. The present revision has been done as per the high court order.
