Karnataka government has decided to dispose of the system of allotting land on 99 year-long leases. Henceforth, the Karnataka Industrial Areas Development Board (KIADB) will issue absolute sale deeds. This decision has been spurred by the long-standing demand of real estate sector and industrial associations.
Karnataka’s law minister TB Jayachandra commented that the current 99-year lease condition for land allotment had been causing issues in the execution of infrastructure projects and housing complexes. Acknowledging the requests put forth by various stakeholders, the state cabinet decided to relax the rule.
The KIADB had the authority to allot land parcels in their industrial areas for housing complexes and single-unit complexes on lease-cum-sale. This was amended in 2014 and the lease term was changed to 30 years. Later in 2015, the lease period was further extended to 99 years to curb early disposal of land in the real estate market. However, this caused issues for the allottees who were unable to sell the land because of the 99-year lease condition.
The absence of absolute sale deeds made buyers wary and soured the allottees’ investments, explained Jayachandra. Under the new system, the allotment will happen on lease-cum-sale agreement and the promoter will become the owner of the land. This announcement has pleased investors as they will now be able to get better returns on their land allotments on the back of increased buyer demand. These changes are expected to become applicable with retrospective effect from 2013.