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Journalism of Courage
The Chandigarh Housing Board’s (CHB) decision to auction residential and commercial properties on freehold basis is an attempt to woo purchasers who have not shown any interest in leasehold properties for a long time. Though the CHB received a nod for auctioning off commercial properties on freehold basis from the UT Estate Office, the decision regarding residential properties is still pending. Here’s a closer look on the issue:
Leasehold properties are ones where one has the right to stay for a particular period of time but do not enjoy absolute right of ownership. A person occupying leasehold property in Chandigarh has to pay the ground rent along with 18 per cent GST annually. In freehold properties, a person is the absolute owner and enjoys the right to resell and mortgage, procure loans, etc., for the property. There is no provision to pay the ground rent in freehold properties. In leasehold properties, the owner (government) enjoys the right of ownership for at least 99 years. After 99 years, the ownership of leasehold property is given to the occupant (purchaser). There are residential, commercial and industrial properties, which are being sold on leasehold basis in Chandigarh by the UT Estate Office and CHB.
“A conversion policy was introduced for people to convert their leasehold properties into the freehold in 1996. People did not show much interest due to high conversion charges in the later years,” a retired CHB officer, said.
CHB, which came into existence in 1976, deals in leasehold properties reserving the right of ownership with itself and the UT Estate office for upto 99 years. In rehabilitation colonies, which were constructed for accommodating slum dwellers from illegal colonies, the lease period is 33 years. The CHB’s properties included residential and commercial properties. Sectors 41, 42, 43, 44, 45, 47, 63 and 51 are the hubs of multi-story leasehold properties constructed by CHB and further sold to people. Usually, residential properties are divided in many categories including LIG (low income group), MIG (medium income group) and HIG (high income group), flats, etc. The allottees of these properties will have to pay 2.5 per cent ground rent of the property for the first 33 years, 3.7 per cent for next 33 years and 5 per cent for the next 33 years. 18 per cent GST will be paid throughout the time period. The rent percentage was calculated on the basis of sale of the property.
Lack of interest from the public in purchasing CHB’s leasehold properties in the open auctions forced the board to sell these properties as the freehold through auctions. People did not show any interest in more than half a dozen announced auctions for leasehold properties, resulting in postponement or cancellation of auctions. With an aim to attract more bidders, the CHB decided to auction its properties as freehold giving absolute ownership to the purchaser. Leasehold concept is also one of the reasons why purchasers or investors prefer to purchase properties out of Chandigarh.
“There will be no need to pay the ground rent for 99 years. A buyer is able to avail the loan on the basis of his/her freehold property. The purchaser will be hassle free from the process to convert his/her leasehold property in the freehold forever. As per my knowledge, there is not a single leasehold property which was converted into the freehold after the completion of 99 years,” Kamal Gupta, President Chandigarh Property Consultant Association, said.
“The UT Estate Officer has accepted our demand to sell eight commercial leasehold properties as freehold. Our demand to allow us to auction residential properties as freehold is pending with the UT Estate Office. We are sure that it will be accepted shortly. The assent of the UT Estate Office is required for selling leasehold properties as freehold,” Rajeev Singla, Chief Engineer, CHB, said.
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