A property distress pursued by the Chandigarh administration

Settlers India A property distress pursued by the Chandigarh administration

A property distress pursued by the Chandigarh administration

13th September 2021

Hundreds of leased properties that can earn the revenue of the Chandigarh administration in millions of rupees are vacant due to a lack of buyers. Almost 70% of the commercial and industrial parcels in the city are leased, allowing occupancy for a limited period, mostly 99 years old. The property rights in the case of such properties belong to government agencies such as the real estate office, the municipal corporation (MC), and the Chandigarh Housing Board (CHB), while the freehold status gives the buyer rights complete information about the property. put up for auction this year, the CHB could land buyers for just eight.

Now, you have decided to reduce your reserve price by 10-50% in another attempt to attract buyers. However, the CHB is not the only UT agency to keep rental properties. The MC has failed to monetize more than 200 leased properties. Facing an acute funding crisis for a long time, the MC could generate income of more than Rs 250 crore from its sale.

 Although the number of vacant leased properties was not available with UT's real estate office, a senior official said: `` Despite several attempts, the department has been unable to find buyers for a large number of commercial and residential leased properties. Futile Auctions The MC has compiled a list of more than 200 commercial properties under its competition that are vacant. Several attempts to auction these properties were in vain; let's say, he tried to sell 105 positions at Mauli Jagran six times but failed. Up to 51 commercial sites in Sector 17 are also vacant, even after an exclusive two auctions. A 24-acre site for a specialty hospital in Manimajra, with a reserve price of ₹ 81 crores, was offered for sale twice but found no buyers. The offer was sold while there were no buyers for 15 leased parcels. ``

The department had generated revenue close to 44 million rupees from the auction of wholly-owned properties, the total reserve price of which was around 27 million rupees, '' the real estate official said. auctions for his 121 freehold residential properties and has been able to sell 87, earning ₹ 70.59 crores. In the same period, he has been able to sell just two residential properties and nine commercial properties for lease, earning ₹ 1.74 crores and ₹ 4.73 crores, respectively. % of the amount of the consideration for 33 years, followed by 3.75% for the next 33 years and 5% for the next 33 years.

 Since this is a substantial amount and property rights are inferior compared to freehold, people prefer to go for the latter, '' said a senior UT official. ventures and capital raising. In Chandigarh, for commercial and industrial parcels, you cannot even convert a leased property to full ownership. Essentially for the residential properties, the transmutation or conversion charges are too high, '' said Pankaj Khanna, who is a current president of the Chandigarh Industries Association. Conversion charges for residential rental properties varies towards an incline and range from 12% to 15% of the consideration amount. '' 

The Chandigarh administration proactively and as a final reaction has written to the Union government, seeking approval to allow the conversion of commercial leased properties to flexible or freehold ownership. We have also sent them a reminder recently, but have not received a response so far, 'said UT advisor Dharam Pal. Pal said one option could be to lower reserve prices to attract buyers. `The CHB has done it recently; other agencies can explore it too, 'he said.

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