em­pow­er­ing landown­ers

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Van­dana Ram­nani van­dana.ram­nani@hin­dus­tan­times.com

With land ac­qui­si­tion now be­com­ing a time-con­sum­ing and an ex­pen­sive af­fair (com­pen­sa­tion that is al­most four times the mar­ket price of land has to be paid for ru­ral ar­eas and two times for ur­ban land), the Haryana gov­ern­ment has now found an in­no­va­tive way to ad­dress the chal­lenge. Last week, it launched the new in­te­grated li­cens­ing pol­icy (NILP) 2015, which seeks to bal­ance the as­pi­ra­tions of farm­ers, property buy­ers, real es­tate de­vel­op­ers and the gov­ern­ment.

Un­der the pol­icy, the min­i­mum size of a town­ship has been re­duced from the ear­lier 100 acres to 25 acres and the in­ter­na­tional model of trans­fer­able de­vel­op­ment rights (TDR), al­ready in place in Ma­ha­ras­tra, Tamil Nadu and Kar­nataka, has been in­tro­duced.

Un­der this pol­icy the gov­ern­ment might not have to com­pul­so­rily ac­quire land. Through the TDR mech­a­nism it seeks to en­able small landown­ers to vol­un­tar­ily mon­e­tise their land by par­tic­i­pat­ing in the process of li­cens­ing, real es­tate de­vel­op­ment and mar­ket­ing and sale of their TDR. In­stead of a fixed com­pen­sa­tion for land ac­qui­si­tion, farm­ers will get TDR cer­tifi­cates which they can sell like stocks in the share mar­ket.

Farm­ers with land hold­ings of less than 25 acres will be able to ob­tain a TDR cer­tifi­cate from the gov­ern­ment and mon­e­tise their land hold­ings at cur­rent mar­ket prices in res­i­den­tial ar­eas and for sites des­ig­nated for ex­ter­nal de­vel­op­ment works such as sec­tor roads, col­leges, hos­pi­tals, fire sta­tions, open spa­ces and green belts etc.

Each farmer will be al­lowed to sell the TDR cer­tifi­cate equiv­a­lent to 1 floor area ra­tio (FAR) of his land at mar­ket rates and not end up fil­ing cases in courts claim­ing more com­pen­sa­tion as per mar­ket rates.

Re­lax­ing norms for builders, the pol­icy now al­lows real es­tate de­vel­op­ers to con­struct projects on land mea­sur­ing less than 100 acres. Also, builders can ac­quire land di­rectly from the farm­ers and give it back to the gov­ern­ment in ex­change of a TDR cer­tifi­cate which will get them ad­di­tional FAR that can be loaded on to their ex­ist­ing project in the same zone. They can also sell the cer­tifi­cate to an­other de­vel­oper in the same zone. This will en­sure that work on ba­sic in­fra­struc­ture such as roads, pipe­lines etc con­tin­ues with­out get­ting mired in land ac­qui­si­tion is­sues, say ex­perts.

This con­cept has re­cently been in­tro­duced for procur­ing land fall­ing within the align­ment of in­ter­nal 18-24 me­tre wide roads to en­able con­nec­tiv­ity with the wide sec­tor roads and to make in­fra­struc­ture pro­vi­sion for spe­cific colonies lo­cated within the sec­tors.

While realty ex­perts have said that this pol­icy is a “game changer” and much bet­ter thought out than Delhi’s land pool­ing pol­icy, they add that its suc­cess will ul­ti­mately de­pend on how well it is ex­e­cuted. “Ul­ti­mately, all de­pends on ex­e­cu­tion, how the pol­icy fi­nally gets rolled out – that will de­fine its suc­cess in the fu­ture. How much TDR can you buy? What is the process of ap­proval? How much time will it take to get ap­provals? All of it has to be thought out. This is only a state­ment of in­tent, a pol­icy doc­u­ment. The modal­i­ties will take some time to come through. This will pave the way for long-term ma­tu­rity of the mar­ket. So far there is ar­ti­fi­cial scarcity and pric­ing in the mar­ket, ar­bi­trage in land val­ues will go away or at least come down,” says Anckur Sri­vast­tava of Gen Real Ad­vis­ers.

The in­tent of this pol­icy is to over­come the chal­lenges of land ac­qui­si­tion with the onus to ac­quire land now rest­ing on the de­vel­oper. “Naredco wel­comes this well thought out move. It will open up in­fra­struc­ture de­vel­op­ment with­out the gover nment hav­ing to put in huge in­vest­ments. Un­der the scheme, it will get about 22% (12% land for af­ford­able hous­ing and 10% land for com­mu­nity ser­vices) of land free of cost both for af­ford­able hous­ing, in­fra­struc­ture and com­mu­nity ser­vices. It is a com­mer­cial method of solv­ing the chal­lenges as­so­ci­ated with the strin­gent land ac­qui­si­tion Act,” says Navin Ra­heja, chair­man, FICCI real es­tate and chair­man, ad­vi­sory coun­cil of Naredco.

Some changes have been made to den­sity norms too. Ear­lier the re­quire­ment was 850 to 900 per­sons per acre, con­sid­er­ing the f act that each fam­ily on an av­er­age had about five fam­ily mem­bers. As­sum­ing then that the den­sity was 850, the min­i­mum num­ber of flats that could come up in a project was 190, mostly 1BHK unit types. Now with the min­i­mum den­sity be­ing re­duced to 750, at least 150 units can be con­structed in a project, al­low­ing a de­vel­oper to build a mix of both 1BHK and 2BHK units de­pend­ing on the de­mand pat­tern in that area, say ex­perts. Also, un­der the new pol­icy, if a de­vel­oper owns 40 acres, the share he would have to sur­ren­der to the gov­ern­ment would work out to about 8.8 acres.

This is a prac­ti­cal pol­icy that is aimed at in­cen­tivis­ing landown­ers, to make them par­tic­i­pants in the de­vel­op­ment process. TDR is also linked to the mar­ket per­for­mance of real es­tate. It may com­mand a favourable value in ur­ban ar­eas, but not in ru­ral or semi ur­ban ar­eas, say ex­perts.

A TDR is akin to vir­tual real es­tate be­ing of­fered to farm­ers. The landowner in pos­ses­sion of a TDR cer­tifi­cate can sell the de­vel­op­ment rights to a builder. It can be traded in the open mar­ket pretty much like any other trans­fer­able ne­go­tiable in­stru­ment.

By re­duc­ing the size of the land par­cel to 25 acres un­der this pol­icy, the gov­ern­ment is hop­ing that even un­pro­duc­tive land can be utilised in the best pos­si­ble man­ner. Also, by en­sur­ing that de­vel­op­ers sur­ren­der 12% of the land to the gov­ern­ment for af­ford­able hous­ing, the gov­ern­ment prob­a­bly wants to con­trol the af­ford­able hous­ing stock in the state and oversee its de­vel­op­ment, add ex­perts.

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