Pugree Problems

Nowhere does it say it is binding on the landlord to use the money for that purpose. More importantly, who will determine the rate ofpremium, and how? If it is to be rated as per the government8217;s ready reckoner on real estate prices, it would mean high taxes to be paid to the state. The landlord or tenant receiving the pugree will have to pay a capital gains tax, income tax and stamp duty.

The more likely scenario would be that landlords will accept premium in part white, part black. As per today8217;s informal arrangement of paying a pugree, two-thirds of the amount received for transfer of tenancy goes to the old tenant and one-third to the landlord. Yet there are tens of thousands of tenancies where rent receipts are in a third party8217;s name. This is where landlords may demand a huge premium for transfer of name, on non-payment of which he can initiate eviction proceedings. So a large number of tenants may suddenly find they have to cough up more money to retain their premises. Why should somebody pay a premium to just become a tenant, when the same amount can be used for acquiring a premises on an ownership basis?