Freehold land will empower citizens, boost Noida's real estate, say experts
Changing landholding right from lease-hold to freehold would enable Noida residents have more control on their property and also help the city emerge as an attractive real estate destination, experts say.
Changing landholding right from lease-hold to freehold would enable Noida residents have more control on their property and also help the city emerge as an attractive real estate destination, experts say. All plots or flats in Noida are currently sold on a leasehold basis and a buyer is given the flat or plot on lease for 99 years and is required to pay a certain sum as lease rent to the authority. But under the freehold system, the buyer will get full ownership of the property.
The Noida Authority, which manages all the land here, had given its in-principle nod to converting the landholding rights during its 195th board meeting on November 1. The proposal, if approved by the Uttar Pradesh government, will have wide-reaching impact on the real estate and its prices.
"It would be a very good decision because everyone who has property in Noida would become its real owner only if it is a freehold land, otherwise they feel like tenants in their own houses,? said N P Singh, President of Federation of Noida Resident Welfare Association (FONRWA).
He said that due to the lease-hold system, selling a property is also difficult. Those had got their properties registered during the formative years of Noida four decades ago, find it hard to sell it because of concerns over the lease agreement ending in next 45 years. "Moreover, if the land holding rights are changed, people would be able to transfer their properties to their children without having to pay any transfer fees, which is around 2 per cent," he said.
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Noida Entrepreneurs Association (NEA) President Vipin Malhan said every owner of the property has to pay an annual lease rent of 2.5 per cent and a positive decision in this regard would empower the residents.
"Earlier the lease period would be 99 years, then it was brought down to 90 years. Everybody thinks he or she is the owner of their house but on paper they are not. Nobody knows what would happen when the lease agreement ends," he said. He said the rates of property are "secondary issue" and they could go up or go down but more important is getting "ownership of our own land".
"Suppose you buy a car on monthly instalments. It is only after you have paid the last EMI that you are actually relieved and feel that you are the owner of the car. It is a similar case, but here you are not relieved," he explained. He said another major drawback is that for any work or construction, people has to run to the Noida Authority to get clearance.
Real estate consulting firm CBRE believes that for home buyers, it is a positive development and will help address a long-pending demand by the people residing in Noida. From the point of view of residential real estate business, Noida and places surrounding it such as Noida Extension and Greater Noida West are important destinations and a lot of investment has been made there by real estate developers, it said.
"This move will ensure a more organized development of real estate business in the city and will help attract investors and home-buyers from all areas," said Rajat Johar, head of residential service, CBRE India. He said this decision will also help streamline the existing process and make the investment in real estate more attractive.
"For the home owners particularly, it will have long-term benefits and it will positively impact residential property owners in all categories, Johar said. CBRE has reasons to believe that Noida has a lot of growth potential such as its proximity to the national capital which makes it a preferred location by people who are looking for affordable, yet easily accessible investment opportunity, both in commercial and residential real estate.
"The city offers a right mix of business and residential real estate options. Commercially also, Noida has witnessed good development, which in turn provided the required fillip for development of residential real estate in the city, he said. CREDAI, apex body of Private Real Estate Developers Associations, agrees that it has been a long pending demand of the developers as well as residents of Noida, Greater Noida and Yamuna to have freehold land.
"A very heavy lease rent and transfer charges are levied on each and every transaction of land, apart from stamp duty. If land is converted into freehold from leasehold it will be a boost in the real estate activity in this region, said Jaxay Shah, President of CREDAI. He, however, said that first a municipal corporation-like body should be created which will learn how to manage the health, sanitation, horticulture and maintenance of the tricity area and only then the freehold process should kick in.
"In the meantime the authorities should abolish transfer charges and allow land sales to operate like a freehold system based on a perpetual lease model. This will enhance the attraction of the area as a real estate destination," Shah said.