Freehold land will empower citizens, boost Noida’s real estate market, say experts


Both, residents and real estate experts agree that changing landholding rights from lease-hold to freehold, in Noida, would enable its residents to have more control on their property and also help the city emerge as an attractive real estate destination

Changing landholding rights from leasehold to freehold would enable Noida residents to have more control on their property and also help the city emerge as an attractive real estate destination, according to experts. 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. However, 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, 2018. The proposal, if approved by the Uttar Pradesh government, will have far-reaching impact on the real estate and its prices.

“It would be a very good decision. Everyone who has property in Noida, would become its real owner only if it is a freehold land, otherwise, they will feel like tenants in their own houses,” said NP Singh, President of the Federation of Noida Resident Welfare Association (FONRWA). He said that due to the leasehold system, selling a property is also difficult. Those who had 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 the next 45 years. “Moreover, if the landholding 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 explained.

The Noida Entrepreneurs Association (NEA) President Vipin Malhan, said every owner of a 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 was 99 years and 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 will happen when the lease agreement ends,” he said. Malhan felt that the rates of property are a ‘secondary issue’ and they could go up or go down but more important would be 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 have to run to the Noida Authority for clearances.

 

See also: Noida Authority gives ‘in-principle’ nod to free-holding of properties

 

Real estate consulting firm CBRE believes that for home buyers, it is a positive development and will help address the 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. “The city offers the right mix of business and residential real estate options. Commercially also, Noida has witnessed good development, which in turn provided the fillip required for the development of residential real estate in the city,” he said.

CREDAI, the apex body of private real estate developers, 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. “Very hefty 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 give a boost to 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 tri-city 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.

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