Unsold freehold Chandigarh MC properties to go under the hammer
Chandigarh MC initiates process to auction commercial & institutional properties that were converted from leasehold to freehold; 200 units up for grabs in first lot
Having received a nod from both municipal corporation (MC) General House and UT administration to convert unsold leasehold properties to freehold, the civic body is all set to auction properties, lying unsold with it for several years, this month.
The MC has started the process to auction its commercial and institutional properties. In the first lot, more than 200 unsold properties will be put up for auction.
Earlier, with the properties being leasehold, the MC had failed to attract buyers despite multiple auctions. The body will now auction booths and institutional sites first.
The MC has prepared a list of over 200 commercial properties under its purview that had failed to attract bidders. The civic body had tried to sell off 105 booths at Mauli Jagran on six separate occasions, but failed. As many as 51 commercial sites in Sector 17 are also lying vacant despite two auctions. Similarly, a 24-acre site for a specialty hospital in Manimajra, with a reserve price of ₹81 crore, was offered for sale twice, but found no takers.
An MC official said the decision is expected to not only help generate revenue for the civic body, but is also likely to give a major boost to the stagnating property market in the city.
The official added that encroachments on vacant public land will also be curtailed as these are sold off to private entities
MC House and UT admn nod
The UT administration had in February decided to allow conversion of unsold leasehold properties to freehold, following which the Chandigarh Housing Board (CHB) started auctioning its properties on a freehold basis.
The UT administration officials had at the time observed, “There are no policy or estate office rules that bar the selling of the plots with the government agencies as freehold properties.”
The move came after the MC repeatedly wrote to the administration for allowing sale of the vacant and unsold leasehold plots as freehold properties.
The MC General House recently gave a nod to the administration to auction its properties after converting them to freehold.
The UT administration is also pursuing the conversion of leasehold to freehold for industrial and commercial plots that have already been sold. It has written to the Union government, seeking approval for the same
‘People prefer freehold units’
Leasehold properties allow occupation for a limited period—99 years in most cases—and ownership rights for these remain with government agencies.
Speaking about their inferior appeal, a senior UT official said, “In leasehold properties, the allottee is required to pay yearly ground rent at 2.5% of the consideration amount for 33 years, followed by 3.75% for the next 33 years and 5% for the subsequent 33 years.”
“Since this is a substantial amount and ownership rights are inferior as compared to freehold, people prefer to go for the latter,” the official added.
While a conversion of residential leasehold properties to freehold is allowed, the charges—which vary from 12% to 15% of the consideration amount—makes it unviable for most owners.