28 September 2016
LONG TERM LEASE POLICY FOR SOUTH MUMBAI PLOTS FIXED
Maharashtra cabinet cleared a much awaited policy on leases for 160 plots, mostly located in South Mumbai, housing some of the city's best-known institutions. Of the 160 plots in question, the leases on 101 plots had expired but could not be renewed due to lack of clear guidelines. According to new policy, leases of these plots will be renewed, but not for more than 30 years. The policy also mentions that in case of any violation of the lease agreement such as if the user has sub-leased the plot, added more built-up space or brought about a change in the use of the plot from what it was originally intended for, penalties will be levied based on violations.
Most of these plots are located in South Mumbai area, which is one of the prime central business districts in Mumbai. These plots fall under ‘W’ land category and are occupied by social organisations, educational institutes, banks, police departments, insurance companies, oil companies and other big industrial houses. According to our analysis, this move will not only clear the uncertain fate of several major institutes and organisations but also increase lease revenue of the state government. However, it will result in a higher outflow for these corporates, as the lease rent will be calculated based on ready reckoner rates instead of nominal rates decided by the state government earlier. Moreover, the maximum lease duration is also reduced to 30 years from an earlier upper limit of 99 years.