Soon, shop owners in Delhi can easily get their property converted to freehold

In a major move that will benefit lakhs of shop owners in the city, the Delhi Development Authority (DDA) has decided to revise the policy for conversion of property from leasehold to freehold.

Soon, shop owners in commercial complexes, developed by private builders on land auctioned by DDA, can easily get their property converted to freehold based on the built-up area. Currently, shop owners in these complexes in areas such as Nehru Place, Rajendra Nagar, Rohini, Dwarka and Pitampura are unable to get their properties converted to freehold, as the land lease is in the name of private developers.

For this, the land-owning agency has initiated the process to adopt the Delhi Apartment Ownership Act, 2009, for commercial complexes. This has been a longstanding demand of shop owners of builder-developed commercial complexes on DDA land.

DDA vice-chairman Tarun Kapoor said, “We have been receiving a lot of complaints in this regard. Shop owners are suffering, as the developer is either missing or not helping them get the property converted to freehold. We are working on modalities to adopt the Delhi Apartment Ownership Act to facilitate conversion of commercial properties from leasehold to freehold based on built-up space.”

While several residential properties have been converted to freehold, DDA has got just about 3,100 applications for conversion of commercial properties as against thousands of plots auctioned or allotted by it since 1994, said a senior DDA official, requesting anonymity.

To simplify the process, the DDA had recently written to the housing and urban affairs ministry, and is getting the revised policy legally vetted. “We hope to implement the revised policy soon. This will also help us recover our dues pending with builders,” the senior official said.

Robin Sharma, president of Dwarka Vyapar Mandal, has been pursuing the matter with DDA since 2004. “As the lease is not in our name, we can’t get bank loans against the property. We have been asking DDA to simplify the policy for a long time. It is not just we who are at loss, DDA is also losing out on revenue,” said Sharma. The Dwarka Vyapar Mandal has 20 commercial complexes with 5,000 shop owners.

Under the present process, the builder has to maintain a record of sale-purchase of shops in the complex developed by it. The list of shop owners has to be submitted by the builder to DDA. The builder collects the ground rent from shop owners and deposits it to DDA. “A change in the policy is need of the hour as shop owners should have full right over the property they have invested in,” said Som Prakash Rehil, president of DDA Commercial Complex Road no. 44 Pitampura Association.

In 1994, the then urban development ministry had started the property (both commercial and residential) conversion process in Delhi. For this, it had set up the Urban Development Fund (UDF) for collection of proceeds from one-time conversion charges.

The land-owning agency is now compiling the list of builders/ plot owners who have not paid the ground rent — annual charges to be paid by lessees against the auctioned plot — to assess the total dues pending. “The process will be completed soon. The dues are likely to run into hundreds of crores of rupees,” said a DDA official.

While shop owners welcome the move, they say that DDA should not penalise them in case builders have defaulted. “In many cases, builders have not deposited the ground rent (paid by shop owners) to DDA. If DDA puts a condition that previous dues have to be settled, the policy will be of no benefit to us,” said JK Gupta, chairman of Nehru Place Welfare Association.