Chandigarh: In a move aimed at unlocking properties worth hundreds of crores, boosting revenue, and improving ease of doing business, the Chandigarh administration has approved conversion of leasehold industrial and commercial plots to freehold ownership.Punjab governor and UT administrator Gulab Chand Kataria has cleared a detailed proposal in this regard. The administration has formally sent it to the ministry of home affairs (MHA) for final approval.A senior MHA official said, “The ministry has received a proposal in this regard from UT Chandigarh, and it is under examination.”The development follows the administrator’s earlier indication that the issue was under consideration.Second time lucky?This is not the first attempt by the Chandigarh administration to allow such conversions. A previous proposal had been rejected by the MHA. However, officials believe the current bid stands a better chance for two key reasons.First, the Centre has been actively pushing the UT administration to optimise land use and has placed the conversion issue among top priorities under its deregulation agenda.Second, the administration has addressed a major historical objection — a strongly worded note by former UT administrator Shivraj Patil in January 2015.Patil had opposed converting leasehold land to freehold, arguing that it would transfer valuable public property to private parties at below-market rates, risk triggering a public scandal, and violate court directives mandating public auctions for government assets.It is learnt that the administration has now provided “prudent” financial justification for the move.Following MHA instructions linked to the issue, the administration had even put on hold projects such as Vikas Marg development and property auctions.BOX 1: Unsold properties causing lossesFor years, the administration has permitted conversion of leasehold residential properties to freehold on payment of hefty fees.However, hundreds of leasehold commercial and industrial properties under the Chandigarh Housing Board (CHB), MC, and UT estate office remain unsold, resulting in revenue losses running into crores.Buyers have largely shunned these properties in favour of freehold options in neighbouring Punjab and Haryana due to the unattractive leasehold model, high charges, and restrictions on ownership and financing.The govt is also struggling to recover unpaid lease amounts from hundreds of allotted leasehold properties.BOX 2: Key issues plaguing leasehold propertiesLimited ownership rights: Nearly 70% of commercial and industrial plots in the city are on a leasehold basis, typically for 99 years, with govt agencies retaining ultimate ownership. Buyers are reluctant to invest heavily without full ownershipHigh lease amount: Allottees must pay annual ground rent — 2.5% of the consideration amount for the first 33 years, 3.75% for the next 33 years, and 5% thereafterFinancing hurdles: Banks and financial institutions are hesitant to extend easy loans against leasehold propertiesLegal tangles: Thousands of transactions were carried out through General Power of Attorney (GPA) agreements to bypass high government transfer fees, leading to numerous legal disputesBOX 3: Other land reforms under considerationIncrease in floor area ratio (FAR) across property categoriesFlexible zoning with a “permitted until prohibited” principleEnhanced coverage area and relaxation of building and planning normsDemand-driven planning and mixed-use provisions
