Maharashtra wants Mhada to pay 2.5 times market rate for private land


In its bid to to acquire land and properties for development of affordable housing in future, Mhada’s efforts could be severely crippled by the state government plan. The state law and judiciary department wants Mhada to compensate private property owners under the Centre’s Land Acquisition Rehabilitation and Resettlement Act, as per which payment would need to be 2.5 times the current market rate.

Mhada sources said this would virtually put an end to any future effort to acquire properties for affordable homes. The department has stated that this Act should apply to Mhada as well. Housing authority officials said it will spell the death-knell for Mhada considering its limited resources. Mhada’s legal department has written to the state, stating that the Act does not apply to it and that it should be kept out of it.

“Mhada builds affordable homes with extremely thin profit margins. 60% of the houses are built for economic weaker sections and low-income groups. We do not make a profit on these homes. A marginal 5% profit is made by selling homes for middle-income groups and 10% on high-income group flats,’’ said the official.

Mhada has its own Act in respect of acquisition of land and properties, payment of compensation in municipal and rural areas. The Act allows Mhada to negotiate privately with land owners. In Mumbai, old cessed buildings can be acquired by Mhada by paying a percentage of the total rent collected by the landlord. If the market rate is applied to a dilapidated cessed building, it will be worth tens of crores, he added.

“The purpose of the Act is to provide transparent process for land acquisition for industrialization, development of essential infrastructural facilities and urbanization with the least disturbance to land owner and other affected families…," the department said. It has made adequate provisions for rehabilitation and resettlement of affected persons. Under the 2013 Act, the process of acquisition is long-drawn. It includes preparing a social impact assessment study, holding a public hearing and publication of social impact assessment study.

“The provisions of Mhada Act, 1976, cannot be obeyed without disobeying the provision of Land Acquisition Act, 2013," said the government letter. “In view of this, it is not legally feasible to issue the notification for land acquisition as proposed by Mhada," it added. The law and judiciary department’s note was in response to Mhada’s plan to acquire land in Nandurbar village.

Mhada’s legal department said an SC judgement stated that it is exempt from paying market rates. This is because it is implementing public housing schemes and therefore it’s not possible to award compensation as per market rate under Land Acquisition Act.

“It is clear there can’t be any comparison between compensation prescribed under Mhada Act and one prescribed under Land Acquisition Act. Observations of the law and judiciary department appear inconsistent with the SC observations," said Mhada, in its reply.

Written by The Realty Paper

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