Recently, the Uttar Pradesh State Industrial Development Corp. (UPSIDC) decided to frame a policy to grant freehold status to all housing plots across the state. So if you have a plot in the state, you would be able to own it completely by converting it to freehold; earlier, that was not possible in Uttar Pradesh (UP).
UP is now among states that will have a policy for conversion of leasehold plots to freehold. Until now, plots in UP were bought and sold on leasehold basis, where the ownership is handed over for a period of up to 99 years. So anyone who buys on leasehold actually owns it only for 99 years and the authority technically remains the first owner. The lease of such properties is usually renewed after the term gets over and for all practical purposes, you are the owner. On the other hand, you are the absolute owner of a freehold property.
What it means for you?
Owing to the move, satellite cities such as Ghaziabad, Noida-Greater Noida and the state capital, Lucknow, will see a hike in property rates. Freehold properties usually fetch higher prices during resale due to clear ownership title since there is less paperwork during transactions of freehold properties.
Says S.L. Chopra, managing director, SCSL Buildwell Pvt. Ltd, a New Delhi-based firm developing residential projects in Gurgaon, “The move definitely increases the value of your property as there will be clarity on the ownership. This is the reason properties in Gurgaon have been historically costlier than those in Ghaziabad and Noida.” Haryana already has a freehold policy in place.
So while existing homebuyers looking to sell stand to gain, prospective buyers will have to shell out more. However, if a property you are buying is not on freehold, you can bargain with the owner. “The buyer who will have to pay for the conversion charges will simply deduct the conversion charges from the agreed sale value. The same can be entered into the sale agreement,” says Pradeep Mishra, a New-Delhi based real estate consultant.
How to get a property transferred to freehold?
Paperwork: You need to visit the office of any of the government agencies under which your property falls. In New Delhi, it could be Delhi government’s land and development office, Delhi Development Authority and Delhi State Industrial or Infrastructure Development Corp. Ltd. Submit your power of attorney, a copy of your property registration paper and sale deed along with a no-objection certificate from the bank, if the property is bought through a loan.
Fee: You will also have to pay a charge depending on the size of your plot. “Conversion will not be allowed if there is a legal dispute over the property title,” says Mishra.
As of now, the rule doesn’t apply to most apartment complexes in UP but only on plots.