Probable Impact on Valuation after abolition of ULC Act 1976


U. S. WARTY
Registered Architect & Valuer
Mumbai.


INTRODUCTORY :

The Economic Commission for Europe states that “High squatter housing indicates that formal land market does not provide affordable residential land for Housing forcing households to occupy the land illegally”. This problem of land and Housing for masses was observed by the various state Governments way back in the year 1976, and to have equitable distribution of Urban Land, The State Governments of 11 states empowered the Parliament, in pursuance of the clause (1) of article 252 of the Constitution, Resolutions were passed by 11 states to the effect that aforesaid matters relating to land be regulated in those states by Parliament by law.

Which was enacted and came into force on 17th February 1976 in the 11 states after receiving the assent of The President. The said Act is called Urban Land (Ceiling and Regulation) Act 1976.

From the preamble of the Act it can be seen that the object of the statute, can be summarized as under:

1) Imposition of a ceiling on vacant land in Urban Agglomerations.

2) Provisions for acquisition of vacant land in excess of ceiling limit.

3) Regulation of construction of Buildings.

4) Provisions for matters connected with the aforementioned subjects.

5) Bringing about equitable distribution of land in Urban Agglomeration to sub-serve common good.



The Conference of United Nations Habitats II held in Istanbul in June 1996 awarded India on two grounds

1) Best performance among developing Nations.

2) The Best overall performance among all 113 participating nations for developing a set of indicators and for suggesting tools for housing and urban programs. The hard ground realities mock such honours on papers. There is no dearth of policies and promises, in our country but unfortunately they remain on paper due to faulty implementation.

 

So is the fate of the Urban Ceiling Act after a period of about 28 years, it is realized that the Act is no more serving that purpose for which it was framed.

 

The implementation is poor due to many reasons including bureaucratic approach, political interference and laxity on the part of Government, So the urban land ceiling act was required to be abolished, which all the states have done excepting two states, one of which is Maharashtra.

 

The ground realities show that so far only 26 Hectors of surplus vacant land is acquired by the Government in Greater Mumbai under the provisions of the Act, after almost 28 years of enactment, which really calls for, the abolition of the Act, as the percentage of surplus vacant land acquired is negligible.

 

Now as we have to judge whether the probable Abolition of the Urban Ceiling Act can affect the valuation of the immovable properties in urban areas, we have to consider the provisions of the Act, which directly touches the value aspect.

 

PROVISIONS OF THE ACT :

Section (6) of the act requires, the holder of the land in urban agglomeration areas to file a return in specified form to decide the quantum of surplus vacant land held by him. The Section 2 (q) defines vacant land as vacant land means land not being land mainly used for the purpose of agriculture in an urban agglomeration but does not include.

(i) Land on which construction of a building is not permissible under the building regulations in force in area in which such land is situated.

(ii) In an area where there are building regulations, the land occupied by any building which has been constructed before or is being constructed on the appointed day and land appurtenant to such building.

(iii) In an area where there are no building regulations, the land occupied by any building which has been constructed before or is being constructed on the appointed day and the land appurtenant to such building.

Provided that where any person ordinarily keeps his cattle other than for the purpose of diary farming or for breeding live – stock, before the appointed day shall not be deemed to be vacant land.


Section 19 : Lands held by the trust, Government, Corporation, Local Authorities, Bank, Foreign State, United Nations, Army, Navy, Air Force, etc.


Section 20 : Power of the State Government to exempt surplus vacant land for undue hardship.


Section 21 : This section deals with the surplus vacant land, to be permitted to be developed for the weaker section of the Society as per the Scheme declared by the State Government from time to time in this behalf.

Section 22 : This section deals with the redevelopment of the properties, which permits the holders to redevelop the land with structure with a dwelling unit, appurtenant land and bonus land of 500mt. per structure with a dwelling unit.


Thus from the provisions of above sections it will be seen that most of the properties have already developed u/s. 19, 20, 21 and 22.


As regards the Scheme u/s 20 and 21 declared by the State Government Honorable Supreme Court in the (Writ Petition No. 4837 / 1987) in the Civil Appeal bearing No. 2598/89 directed the State Government to issue Additional Guidelines regarding the exemption of surplus vacant land for implementation of housing Scheme for weaker section.

Later in the judgment delivered by the Honourable Supreme Court on 31st January 1990, the Bench Observed “We are of the view that allotment shall be on the basis of “One family – One Flat” and the family shall include husband, wife and dependant children”. A family which has one flat in any urban agglomeration within the state shall not be entitled to allotment or acquisition by a transfer of a flat under this code.



A Monitoring Committee is appointed by the State Government, whereby the committee shall have powers to scrutinize all the relevant documents and give appropriate directions to the builders and applicants keeping the requirements of the Scheme and the case in view.


The provisions of the various Sections mainly deal with the exemptions, and regulations for the redevelopment. It will thus be seen that the development is not banned due to the U L C Act, but is only governed, and there is development which uncurbed, except the Scheme for the weaker section of the Society which are undertaken under Section 20 and 21.



It is seen that in the recent years no Schemes under Section 20 and 21 are coming up, as there area restrictions on sale rate and size of the flats.


EFFECTS OF PROBABLE ABOLITION OF U L C ACT :


In case the U L C Act is abolished the large stretches of the lands may come forward for Schemes. However, as there is good demand for flats, competitive projects with latest amenities in the buyers’ market may offer quality in Housing at affordable rates as compared to prevailing rates in the vicinity, as the Scheme undertaken for areas more than 1Acre gives Income Tax Exemption, under the Income Tax Provisions.


Though there is no likelihood of the direct impact on the value of the immovable properties due to probable Abolition of U L C Act, the availability of the surplus vacant land for large housing project will have some impact on the land – values, and thereby on the flats, due to coupled effect of abolition of U L C Act and Tax rebate for Scheme more than 1Acre, in spite the land owners expectations of the market rate for the surplus vacant land that may be made available due to abolition of U L C Act.


The only direct Impact of abolition of U L C Act, may be felt in the following cases.


Where the lands area proposed to be acquired under section 10 (5) of the Act.


Under the provision of U L C Act, the amount payable is Rs. 10/- per Sq. mt. in Category ‘A’ or ‘B’ with a maximum of Rs. 2 Lakhs.


In case the Act is abolished the value of the surplus land shall be as prevalent in the vicinity, which will be considerably higher.

So though the direct impact on the property market is not anticipated, the rates of the flats in developments undertaken in the Scheme on surplus vacant lands, under U L C Act will show lower trend than prevailing as demand and supply theory will come into action, with surplus flats suddenly available to the purchasers, with vide range of choice.

Last but not the least, The large pieces of lands available will form the platform for utilization of T D R, as in the larger layouts the utilization of T D R, without concessions, in the open space, parking spaces etc. is possible as there is good scope for planning which is without much, of constraint, and making all facilities like park, health club, swimming pool etc. needless to state that these large stretches of surplus vacant lands, which are mainly in Suburbs of Mumbai will be a formidable task before the developers, who are taking up Textiles lands in the Island City of Mumbai, as affordable Houses can be offered on these surplus – vacant lands, in Suburbs, if U L C Act is abolished as prices of land will be lesser than in City.


To sum up the probable abolition of the U L C Act will not create a major impact on the valuation except marginal drop in the rates due to mass scale housing projects that may come up as a result of large scale vacant lands made available.