DDA halts conversion of properties from leasehold to freehold

With a revision in rates in the works, the Delhi Development Authority (DDA) has halted conversion of leasehold properties to freehold on the direction of the Union Ministry of Housing and Urban Affairs (MoHUA), sources in the DDA and the Ministry have confirmed.

When The Indian Express last checked on January 10, the DDA’s online portal for conversion of properties was not functioning.

Interestingly, the halt comes on the heels of another land-owning agency under MoHUA —the Land and Development Office (L&DO) —deciding to adopt the Delhi government’s circle rates to determine its conversion charges.

Conversion of L&DO properties from leasehold to freehold has been closed since December 2022, while the agency has been revising the rates and the standard operating procedure (SOP).

Sources told The Indian Express that now that the L&DO has adopted the circle rates, a new SOP would be drafted and conversion would be restarted soon.

The L&DO administers around 60,000 properties on the Centre’s land in Delhi, out of which about 35,000 were converted to freehold by 2021, according to a 2021 CAG report.

The Delhi government is currently in the process of revising the circle rates, according to government sources.

The L&DO — which announced on January 1 that it would use the circle rates last notified by the Delhi government to determine rates for conversion charges — earlier had its own rates for conversion.

It is expected that conversion of DDA and L&DO properties will begin together when the Delhi government comes up with new circle rates.

Officials from DDA did not respond to requests for a comment.

A K Jain, former DDA planning commissioner, meanwhile, said: “In the 1970s, when DDA started allotting flats and land, it only allotted them on a leasehold basis. It was only in the 1990s under the P V Narasimha Rao government, which urged for liberalisation, that DDA reviewed its policy and started giving freehold status.” Following this, it was slowly extended to older properties as well, he added.

The rates for conversion of residential properties were last updated in 2011 by the DDA. It had last year approved a 10% hike in land rates for conversion of commercial, industrial, and multilevel parking properties.

According to the DDA’s policy, leasehold plots can be converted to freehold by paying a one-time charge linked to the size of the plot and the officially notified land rate.

Rates depend on the size of a property — with the conversion fee calculated only based on the area beyond specified thresholds. Original allottees and lessees are eligible for rebates of 25%-33% on these charges.

In case of leasehold, the authority remains the owner of the land, while the allottee holds the property for a specified period — subject to conditions on transfer and use. Freehold denotes absolute ownership of the land and building, allowing transfer or mortgage without prior permission.

Usually, the conversion of a property from leasehold to freehold is done before a sale or transfer.