Mumbai's leased land rates to be based on ready reckoner ...

Oct 10, 2012, 11:29AM IST

Mumbai

The land properties in Mumbai city and suburbs given on long lease by the government will now be charged a new lease rent based on ready reckoner rates as and when they come for renewal. The Maharashtra cabinet gave its approval to this hike in rent rate on Tuesday. As a result of this decision the lease rents in Mumbai will go up in some cases by about 18,000 times.

Speaking after the weekly cabinet meet Maharashtra Chief Minister Prithviraj Chavan said that the cabinet approved the proposal to connect lease rent rates to real estate ready reckoner prepared by the government to determine property rates in various areas. Mr.Chavan said ?Most of the land plots given on long lease right from the British era have been charged very small amount as annual lease rent. Some plots of land have been given on 50 year lease while others have been given on 99 or 999 year lease. Those whose lease period is over will now have to pay rent according to the ready reckoner value?.

The Chief Minster gave some examples of plots in south Mumbai to explain how the lease rent rates will now go up. Mr.Chavan said ?Just as an example one property in Colaba which is a 500 square meter plot has been paying an annual lease rent of Rs.17 to the government now according to ready reckoner rates this property holder will have to pay a rent of Rs.304000 (Three lakh Four Thousand ) per annum. Another property owner in South Mumbai who holds a 3,000 square meter plot has been paying a lease rent of Rs.74 per annum now after lease renewal this property owner will have to pay a rent of Rs. 33,07000 (Thirty Three lakh Seven Thousand) per annum.?

CM Chavan said ?Mumbai city has 1282 plots of land which are on long lease while suburbs have 295 plots of land which are on lease. 517 plots in city are up for renewal while 149 in suburbs are also up for renewal as their lease period has expired. The properties whose lease contract is to be renewed will now attract higher rent. The properties whose lease contracts are still on will not be affected for now.?

The government has also made another important change in the lease related law (Maharashtra land revenue code) which restricts the period of lease to only 30 years. Earlier the property lease used to be for 50 or 99 years but now no property will get a lease renewal contract beyond 30 years.

The state government had originally taken a decision to change the lease rent formula in 1999. But most property owners went to court when the lease rents were increased. The courts gave certain guidelines and asked the government to implement the changes. However in 2006 the government withdrew the decision to hike lease rents. Now the state cabinet has once again brought in a proposal for increase in lease rents for land property.

Asked about whether he expects the cabinet decision to be challenged in court, CM Chavan said ?People have the right to go to court nobody can stop anybody from going to court but we have studied all the decisions given by courts earlier in this matter and also studied the guidelines issued by High Court and Supreme Court. Now we are confident that these changes can be implemented without any legal challenges being raised?.

Source: The Economic Times, Mumbai

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