Haryana’s new integrated licensing policy: Will this be a new dawn in land acquisition?

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Published: November 16, 2015 12:17 AM

It is essential on the part of the government to implement policies that give a boost to urban household development

The government of Haryana has announced the launch of the New Integrated Licensing Policy (NILP) 2015, which aims at providing impetus for the development of hyper and high potential urban complexes in certain identified cities in the state. According to news reports, these urban complexes are going to be created across certain commercially important areas of the state, including Gurgaon-Manesar, Faridabad-Ballabhgarh, Sohna, Sonepat-Kundli, Panipat and Panchkula-Kalka-Pinjore. Considering the fact that Haryana has been at the centre of massive real estate investments over the past decade due to its proximity to the National Capital Region, the current move by the state government becomes even more important as far as continuing the development of the real estate sector in the state is concerned.

According to statements issued in the media by the state government, the NILP aims to maintain proper balance between the aspirations of farmers, property buyers, real estate developers and the government. In fact, it is believed that with the initiation of this policy, approximately 10,000 acres of land owned by small farmers will get released for development.

The key highlight of the NILP is the introduction of the “transferable development rights (TDRs)” model, whereby farmers and landowners owning small pieces of land will be able to monetise their property at prevailing market prices and obtain TDR certificates. Generally, TDRs entail acquisition of land (whole or part) from the landowner in exchange for development rights, which are transferred to the landowner. The TDR certificate can be used by the landowner on the remaining portion of the land—which the landowner retains after the acquisition—or it can be utilised on any other property, or it can even be traded to other parties for monetary consideration.

In order to protect the interests of farmers and small landowners, the NILP puts in place the requirement of execution of a “TDR agreement” between the builder and the landowner, which will be valid for a period of two years. Another important measure in the interest of the farmers is that TDRs will be transacted between the builder and the landowner at prevailing market prices. This will ensure that the pricing of TDRs will be left to the market forces and will not be linked with any opaque pricing formula set up by the government. If implemented in full letter and spirit, this will be prove to be significant in ensuring that the process of obtaining land becomes expedient and less cumbersome.

Pursuant to the NILP, real estate developers will be permitted to set up projects on an area of less than 100 acres. Bringing down area norms for establishing a colony from 100 acres to 25 acres, the NILP provides for a global floor area ratio (FAR) between 1.0 to 1.25 for colony size of 25 acres to 50 acres, and 1.50 for colony size over and above 50 acres. Even though the NILP document is yet to be made available to public, it appears from various news reports that the step is going to be a game-changer in the real estate sector.

Considering that almost half of the country’s population will become “urban” by settling in and across various cities over the next ten years, it has become essential on the part of both the central as well as state governments to implement policies that will give a boost to urban household development.

Buoyed by the recent successes of the Andhra Pradesh government in acquiring vast tracts of land through a successful land pooling arrangement for the development of the proposed new capital Amravati, it appears that the Haryana government does not want to be left behind in this race of effective land acquisition policies. This could prove to be a new dawn in real estate development in India.

Considering that there has been a decline of approximately 5% in real estate investments in the last one year, according to a study done by Assocham, this announcement will give the required and much need boost to infrastructure projects in the state.

(CV Srikant contributed to the article)

The author is partner, J Sagar Associates, Advocates and Solicitors. Views are personal

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