What is land pooling? Will it make houses cheaper?

 BT Online        Last Updated: May 22, 2017  | 11:23 IST
What is land pooling? Will it make houses cheaper?

In a bid to make housing in the national capital affordable, the Delhi government on Wednesday declared 89 villages as urban areas which will help the authorities develop infrastructure projects in such localities.

Stuck for nearly two years, the policy was finally given the green light when Urban Development Department of the Delhi government issued a notification after Lt. Governor Anil Baijal approved the Delhi Development Authority's (DDA) Land-Pooling Policy (LPP).

According to Rohan Sharma, Associate Director - Research and Real Estate Intelligence Service, JLL India, "the policy still remains a novel idea aimed to solve the issues faced in acquiring land due to fragmented land holdings and higher compensation payable in the wake of increased land valuations."

"This policy is likely to result in residential development projects across the prime city, which has an acute shortage of housing and where most of the housing needs are fulfilled by the DDA. This policy is likely to lead to an increase in private participation in housing development across the city," Sharma added.

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The passage of land pooling policy is expected top pave the way for affordable housing. The DDA's Master Plan Delhi (MPD) 2021, which proposes construction of 25 lakh new housing units by 2021 is likely to get a boost.

As per DDA estimates, 2.5 lakh houses, including 50,000 EWS (Economically Weaker Sections) units, will require 1,000 hectare of land.

Welcoming the move, BJP MLA and Opposition Leader in the Delhi Assembly, Vijender Gupta said the "historical" move would accelerate the process of providing affordable housing to 20 lakh families

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"It would fill up Delhi's infrastructural deficit that has led to cropping up of unauthorised colonies. The notification comes due to direct cognisance taken by the Delhi L-G," Gupta said.

What is land pooling?

The purpose of land pooling is to get a group of land-owners residing in urban villages to pool their land and hand it over to a government agency so that infrastructure like roads, electrical sub-stations, stadiums, industrial areas, old-age homes, hostels, schools, etc can be developed.

The remaining land is then returned to the owners who can partner with real estate developers to build apartments and residential properties.

The DDA has created two categories for land pooling - above 20 hectares and second for land between 2 and 20 hectares

How will it help homebuyers?

With the help of better infrastructure and readily available public amenities, the land pooled by the owners sees a substantial increase in its price after a few years of development.

With property prices going through the roof in already established colonies, carving out new areas to make satellite townships can provide a better alternative for people from low-income groups who are live in the cramped areas of the city.

According to Sharma, this policy has the potential to change the dynamics of the residential market in NCR by boosting the supply of affordably priced apartment units within the geography of Delhi.

"The policy is estimated to unlock around 20,000-25,000 hectares of land across Delhi, primarily in the urban villages and smaller towns at the city's peripheries. Such development is likely to result in a healthy availability of residential dwelling units, which will also help control residential prices," Sharma added.

"Though there is no capping on the prices of the houses available, the home-buyers will certainly benefit from the increase in the number of housing units available as also from the proposed infrastructure around these swathes of lands. Since there is an acute shortage of housing units in Delhi, this initiative will ensure an increase in the supply to the ever increasing state of demand in the state," says Vijay B Pawar, Founder and Director, Mirador Dwellers Pvt Ltd.

"Around 20 to 25 lakh houses would be built under the policy over the next 5 to 10 years on around 40,000 acres of land making way for mass affordable housing in and around NCR," says Parth Mehta, Managing Director of Paradigm Realty. 

How does it help land owners?

Providing relief to small farmers, self-penalty on DDA for delays, and flexibility to farmers to trade their land or tie up with developers for land-pooling are some of the important features of the policy.

In case DDA delays the development of the pooled land, it will pay penalty to the landowners/farmers of 2 per cent of the External Development Charges (EDC) for the first two years and 3 per cent for the period thereafter in case of delay beyond the completion of the project or five years, whichever is later.  

However, with RERA notified for NCT of Delhi, it will however be advisable for buyers to understand that projects cannot be launched without complete approvals and sanctioned plans and project registration with the regulatory authority. Since the policy involves surrendering of land, fresh allotment of land and only then can the developer go in for project approvals, buyers should be careful in committing any money to project announcements under this scheme by private development companies, Sharma said.

 

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