Thursday, 25 June 2015

Land pooling policy will unlock huge tracts for new housing

The Delhi Development Authority (DDA) approved the land pooling policy in the last week of July 2013. This policy was introduced in response to the many challenges faced by the nodal body in acquiring land in the city of Delhi because of growing demand for housing and rising quantum of compensation in the wake of increased land valuations.

DDA created two categories - one for land pooling above 20 hectares and the other for land pooling between two and 20 hectares.

Under this policy, the ground coverage has also been increased from 33 per cent to 40 per cent.

The idea behind the policy is of course to promote private sector participation in land consolidation and development. In this scenario, DDA would be able to assume a larger role of a facilitator.

What has been envisaged under the land pooling policy is that landowners would receive between 48-60 per cent of the developed land back from the DDA in lieu of compensation and they would be free to develop that land in any way they desire.

Delhi Development Authority would use the remaining portion of the pooled land for creating the associated infrastructure that is required as well as for creating public and semi-public areas.

This policy is likely to result in a spurt in residential development projects across the city, which has an acute shortage of housing and where most of the housing needs are fulfilled by DDA. This land pooling policy is likely to lead to a marked increase in private participation in housing development across the city.

The urban development ministry has, on its part, approved the regulations laid down in the land pooling policy that has been introduced by DDA. However, while granting the approval, the ministry has made five amendments to the policy. These are:
  • 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.
  • If farmers/landowners are unable to pay the EDC, they can give up a larger portion of the land to the DDA, and in this case they shall get 35 per cent of the returnable residential land back for their use.
  • The development companies shall have to compulsorily construct houses for the EWS (economically weaker sections), which will amount to 15 per cent of the FAR over and above the permissible FAR of 400.
  • Transparent system for prioritising the allocation of returnable land based on a computerized monthly-grouping system.
  • Complete utilisation of the FAR meant for residential purposes.

It is estimated that the land pooling policy will 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 not only enhance housing options but also help in keeping a control on residential prices.

The policy will make it possible to construct around 25 lakh housing units in the next six to eight years. This is in line with the housing shortage spelt out in Master Plan Delhi 2021, which was notified in 2013.

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