August 21, 2006

ULCA: Need for Repeal

While the Urban Land Ceiling Act (ULCA) has been scrapped in most states in India, Maharashtra continues to follow the archaic laws that developers around the state feel should be scrapped as soon as possible. The Act was enacted in 1976 to impose a ceiling limit on vacant land with private holders and use it to house the poor in urban areas. According to this Act, an individual could not own more than 500 sq. metres in a Grade A city, and not more than 1,000 sq. metres in a Grade B city. The intent was that the government would acquire all the surplus land at Re 1 per sq ft and would use it for public purposes. But most of the surplus land is stalled in litigation, and over a span of 27 years since the enactment of the legislation the government was able to acquire barely two to three per cent of all the land it seized. People with influence got the seized land exempted under various provisions. Since so much land was tied up in litigation, there was a shortage of land and property prices went up drastically. The excess land is taken over by slums and corruption and malpractices are the order of the day. Developers across the state feel that once the act is scrapped, the state will have several benefits; a large quantity of land held up shall be freed for development, property prices will stabilise, and this in turn will help increase the housing stock. The revenue due to increased development will be available to the government and so on. Rohit Gera, Executive Director of Gera Developments in Pune says, "No one is benefited from this act - neither the developer nor the buyer. Instead, these days the rates are so high, a common man cannot afford to buy the properties in good locations." Once there is adequate supply of land, the property prices will automatically stabilise. " He says, "If the act is repealed there are possibilities of property prices reducing by 10 per cent to 15 per cent (depending on the area) in Pune." According to Sunil Mantri, Chairman, Mantri Group , "Initially when the act was passed in the parliament, the intention was to provide low-cost housing for common people with the surplus land to be handed over to the government for public purposes. However the purpose of the act was never followed." However, Sanjay Deshpande, Joint M.D of DSK group in Pune feels, "The ULC Act should not be scrapped totally. Instead there is a need for minor modifications in the present act. Once the act is scrapped there will tend to be a monopoly in the market that will affect the property prices. Instead of scrapping the whole act there is a need for a small correction. Most developers feel the ULC Act should be repealed in the state. The question is, How soon will the government act? Source://