Housing coops protest conversion fee -Governance Now

Housing coops protest conversion fee

Freehold conversion fees for Occupancy Class-2 plots set at 25 percent; residents argue for two percent

Geetanjali Minhas | October 3, 2018 | Mumbai

#MHADA #Maharashtra colonies #Mumbai housing #Occupancy Class-2

Residents of some 25,000 housing colonies across Maharashtra are protesting a 25 percent fee for converting 'Occupancy Class-2' and lease-hold land to freehold land.

On September 25, the Maharashtra government decided to convert the plots allotted to these cooperative housing societies from 'Occupancy Class-2' to 'Occupancy Class-1', or freehold land. It set the fee at 25 percent of the current valuation of such land in the government's ready reckoner (RR).

Residents of these colonies say this is exorbitant. They argue that a two percent fee would be fair, since these are residential and not commercial properties. They give this example: if the RR rate is Rs 1 lakh per square metre, then for a flat of 500 square feet (about 46.5 square metres), at 25 percent the fee works out to about Rs 11 lakh, and if the RR rate is Rs 2 lakh, the fee works out to about Rs 22 lakh.

Most of these plots – there are 3,000 in Mumbai alone - were given to housing cooperatives formed by people from the middle and lower income groups more than 40 years ago. They were charged prevalent rates and they built flats for their members. Over the years, many house owners sold their flats or rented them out without following government procedure and paying transfer and conversion fees. The current owners want to rebuild the aged apartment blocks. They cannot do it without paying the 25 percent fee.

"The residents are now old and retired. Most of them have life savings of Rs 25 lakh or so. The fee works out to be huge. In many colonies, the per member the charges can be anywhere between Rs 5 lakh and Rs 10 lakh, and the cooperatives won't have the capacity to come up with the crores these will add up to," says Salil Rameshchandra, president of the Federation of Grantees of Government Lands (Association of Persons). He says these plots were originally swamps and it was the cooperatives that worked to make the area inhabitable, building homes and infrastructure that cost hundred times the original purchace price of the land.

Residents say the government has not distinguished between Occupancy Class-2 land and lease lands and has applied the same rate to both. The government now wants to treat these lands on par with MHADA or CIDCO lands and vest ownership of these lands with them. Occupancy class 2 lands have the status of ownership with certain riders. The property card is in the name of occupant, which means that the right, title and interest is vested with the occupant and not the government.

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