The Land and Development Office (L&DO) in Delhi is facing criticism for delaying the conversion of leasehold properties to freehold status. This two-year informal pause, due to an unfinalised standard operating procedure, has led to legal challenges and Delhi High Court involvement. Leaseholders of prime properties are eager for the housing ministry's approval, as the high market values make conversions attractive. The conversion charge is currently 6-10% of land value. The delay affects thousands of properties under L&DO jurisdiction. The situation calls for a balanced approach addressing both government and property owners' interests while ensuring a fair conversion process.
The Land and Development Office (L&DO) in Delhi has been facing criticism for delaying the conversion of leasehold properties to freehold status. This process has been informally paused for two years, as the agency has yet to finalise the standard operating procedure (SOP) for such conversions. The delay has caught the attention of the Delhi High Court, which has demanded an explanation from the land and development officer in a case where a petitioner sued the agency for failing to convert their property despite meeting all requirements.
Leaseholders of prime properties on L&DO-owned land in Delhi are eagerly awaiting the housing ministry's approval to convert their properties to freehold status. The ministry has not responded to queries about the situation, though sources suggest a decision may be made soon. L&DO has received numerous conversion requests but has put the process on hold without issuing a formal order, leading some individuals to seek legal recourse. L&DO informed the High Court that conversions were halted from 2022 due to the pending SOP.
The court deemed this a "serious matter" and ordered the L&DO officer to appear in person to explain the situation. In another case, the court directed L&DO to convert a petitioner's property within six weeks. Most of these properties were allotted by L&DO to individuals and entities in the 1950s at nominal rates. The conversion charge for leasehold to freehold is currently 6-10% of the land value, depending on the property size. Due to the high market value of these properties, there is increased demand from leaseholders to convert them to freehold, potentially to sell them at a profit. A former L&DO official suggested that middlemen involved in property transactions may be benefiting significantly from these conversions.
The official recommended that the government consider methods to better determine property values to protect its interests while proceeding with conversions. Some real estate experts propose using the prevailing circle rate to calculate conversion charges. However, government sources note that this approach may result in undervaluation, as Delhi's circle rates have not been updated since 2014. Another former L&DO official pointed out that current market rates far exceed circle rates but emphasised that the government should revise its norms if the current policy is deemed inadequate.
The L&DO oversees approximately 57,400 residential, 1,600 commercial, 1,400 institutional, and 110 industrial units in Delhi. The ongoing delay in conversions affects a significant number of property owners and has implications for the real estate market in the capital. The situation highlights the need for a balanced approach that addresses the interests of both property owners and the government, while also ensuring transparency and fairness in the conversion process. As the matter continues to evolve, stakeholders await a resolution that will clarify the future of leasehold to freehold conversions in Delhi.
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