The benefits of Delhi land pooling policy and how it works2 min read . Updated: 12 Sep 2018, 10:55 AM IST
Increase in the supply of developed land parcels may lower existing property prices in Delhi NCR
The much-awaited Delhi Land Pooling (DLP) policy got approved on 7 September by Delhi Development Authority (DDA), at a meeting headed by Delhi Lieutenant-Governor Anil Baijal. It now awaits approval from the Ministry of Housing and Urban Affairs. Under the new scheme, DDA will pool land parcels owned by individuals, a group of owners or a builder, then develop the land and return it to the owners.
The system will replace the process of land acquisition, wherein the government acquired land by giving a fixed compensation and the ownership changed hands. With complaints of low compensation and forceful acquisition, the system became unpopular in the last few years.
The new policy is expected to unlock huge parcels of land for development and affordable housing.
The new policy
The policy will be applicable to urban extensions of Delhi for which zonal plans have been approved. The concept is about developing urban land parcels available in the city, especially on its outskirts, in an efficient, sustainable and equitable manner. It will help develop and expand the city in a planned manner by increasing the supply of fresh land.
The idea behind land pooling is to aggregate small land pieces into a large parcel, develop necessary infrastructure such as water supply, sewage system and drainage, make provision for larger social and other infrastructure, including metros and main roads, and return the developed land to owners or developers. Parts of this land parcel will be sold by the government to recover the cost of developing infrastructure and public spaces.
Under the DLP policy, the owner or multiple owners shall be permitted to pool land for the purpose, as per the prescribed norms and guidelines.
Land owners who offer 2-20 hectares of land will get 48% of the land back, and those who offer more than 20 hectares will get 60% back.
However, the floor area ratio (FAR), the ratio of the size of the land and the area you are allowed to construct, has been reduced from 400 to 200. Owners will be responsible for internal development like sector roads and infrastructure and services (including water supply lines, power supply, rain water harvesting) falling in their share of land.
Although the land returned to the original owners will be smaller in size, they will have access to infrastructure and services developed by DDA.
Also, the policy is likely to unlock 20,000-25,000 hectares. Increase in the supply of developed land parcels is likely to lower existing property prices. “This policy will bring better quality gated apartment projects at affordable prices," said Ankur Dhawan, chief investment officer, PropTiger.com.
Many experts said it will also restrict price escalation in already developed areas, including Noida and Gurgaon. “There will be disruption in existing property prices within Delhi. It will not lead to substantial price correction, but will rationalise prices," said Samantak Das, chief economist and head of research, JLL India.
However, reduction in FAR will have a negative impact. “By keeping the FAR at just 200, it will defeat the whole purpose of providing housing to all in Delhi which is already expensive and is in short supply. Reduction in supply will make properties more expensive. Higher supply would have curtailed prices to a large extent and given stiff competition to other prominent markets in NCR, including Gurgaon and Noida," said Anuj Puri, chairman, ANAROCK Property Consultants.
The policy is still in the approval stage, and execution will be the key to its success.