Is a gaothan property a safe investment bet?

[ecis2016.org] This article attempts to offer buyers and investors better clarity with regard to gaothan properties while also clearing all ambiguity about the status of their ownership titles

There is a great deal of confusion among home buyers, with respect to ‘gaothan’ properties in Maharashtra. Some of the commonly-asked questions on this subject include:

You are reading: Is a gaothan property a safe investment bet?

‘What are gaothan properties of Maharashtra and is it safe to invest in gaothan properties?’

‘Do banks give loan for purchase of gaothan properties?’

This article attempts to offer buyers and investors better clarity over gaothan properties, while also clearing all ambiguity about the status of their ownership titles.

What is the meaning of gaothan?

The Marathi word गावठाण is a combination of two words गाव and ठाण, with the first word meaning ‘village’ and the second meaning ‘site’. The term is used to denote areas in and around old villages in Maharashtra.

What is a gaothan property?

According to the Maharashtra Land Revenue Code, 1966, gaothans are land parcels ‘included within the site of a village, town or city, as determined by Section 122 of the Code’.

Due attention must be paid to the fact that it is not just areas along the villages that qualify to be gaothans. Areas along towns and cities are also classified as gaothans across Maharashtra. In Mumbai, for example, there are 52 BMC-recognised gaothans, as specified in the Development Plan (DP) of 2034.

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Also note that a land parcel that is not a gaothan, can be classified as such if the collector so decides. “It shall be lawful for the collector or for a survey officer to ascertain and determine what lands are included within the site of any village, town or city and to fix and from time to time to vary the limits of the site determined as aforesaid, regard being had to all subsisting rights of landholders,” reads the Maharashtra Land Revenue Code (MLR Code).

Rates of gaothan properties

As compared to other properties in the city limits, gaothan properties are quite affordable. In Navi Mumbai, you could find a gaothan plot for as less as Rs 70 per sq ft. Plots measuring 1,000 sq ft also have a starting price of Rs 1 lakh. Nevertheless, Rates of residential gaothan plots, can go as high as Rs 99 lakhs, show numbers available with ecis2016.org.

Are gaothan properties legal?

As long as you hold clear property titles, your ownership over a gaothan property is secure. However, home buyers and investors must ensure that they buy from a developer or in a housing scheme that is either being run by the development bodies such as the BMC or the CIDCO, or have the approval of these bodies.

Typically, agencies like the BMC and CIDCO acquire land from gaothan property owners and allocate it to developers, for constructing houses for the community. Considering the space crunch in city centres and unaffordable property prices, development of gaothan land comes as an obvious choice for development authorities, to allow urban expansion. This is precisely why Navi Mumbai, a hub of affordable properties, has a wide concentration of gaothan properties.

In case you are buying a gaothan land parcel directly from a land owner or any other entity other than those approved by the development authority, the transaction would require an approval from the latter, to be legally binding. In this process, the buyer will also have to pay a transfer fee to the development authority.

If due care is taken while investing in gaothan properties, chances of disputes in future can be minimised.

How to check the legality of a gaothan property?

As it is important for a gaothan property to be approved by a development authority, the buyer must approach the office of the revenue department or the website of the authority concerned, to find out if the project is part of a government-led scheme. Unless that is the case, refrain from investing in a gaothan property.

Documents required for buying a Gaothan property

Given below is a list of important documents that one must check, before buying a gaothan property.

Letter of allotment: If you are buying the property from a developer, they must show you a letter of allotment, from the development agency. This document will have, among other details, the name of the original villager.

Award copy: The award copy is the proof of allotment of the plot to a villager.

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Letter of intent: The letter of intent is issued by the development authority to the allottees. The letter specifies the details of the allotted land.

Lease agreement: Since gaothan properties are generally leasehold properties, a lease agreement is signed between the development authority and the owner, putting in place the terms and conditions of the mutual agreement.

Tripartite agreement: In case the government is transferring the land in the name of a third party such as a developer, a tripartite agreement is signed between the development authority, the owner and the builder.

Transfer charges: Allottees have to pay the transfer charges to the development authority, in exchange for the allotment.

Final order: After the signing of the lease agreement, a final order is issued to the allottee, transferring the property title in his name.

Do banks offer loans to buy gaothan property?

Banks typically do not offer home loans, on the purchase of gaothan properties. Even if it is available, a loan is no guarantee for the legality of your property. It also does not guarantee that disputes with regard to the title will not not arise in future.

Gaothan properties: Key aspects

• Development authorities regularly auction gaothan properties. Interested buyers must keep an eye out for such announcements.
• Remember to hire a legal expert, to ensure the deal is devoid of any illegality.
• Do not fall for unbelievably low-cost offers, as they may be an eyewash for a scam.
• You will largely have to rely on your own funds, to purchase gaothan properties.
• Infrastructure in these areas might not be at par with that in city limits.

Gaothan Expansion Scheme

Amidst a sharp rise in population numbers, development authorities across the country are seen using land in areas close to city, town and village limits, to allow urban expansion. The same rationale is behind the Gaothan Expansion Scheme in Maharashtra.

Under Section 44 of the MLR Code, land owners can apply for these schemes, if an agricultural land is situated within 200 metres from the existing boundaries of a gaothan. Once their application is accepted, the land use is converted from agricultural to non-agricultural purpose. The collector in a city, is empowered to grant approvals for the gaothan extension scheme.

Activities permitted on land under Gaothan Expansion Scheme

• Residences.
• Retail shops, restaurants, banks, personal service establishments and repair service establishments.
• Schools.
• Community centres and other social institutions.
• Religious places.
• Clinics, dispensaries and health centres.
• Essential public services and utilities, including local government offices.
• Stables for domestic animals, subject to a limit of five animals on each plot.
• Traditional household industries.
• Storage of crop, fodder, manure, agricultural implements and other similar needs.
• Parks and playgrounds.
• Fishing, fish and net-drying, boat storage, boat repairs and servicing and storage of fuel.
• Public conveniences.
• Service industries.
• Warehousing and cold storage on plots of not more than 0.20 hectares.

Word of caution

In August 2019, the Bombay High Court temporarily restrained the BMC from acquiring any gaothan properties. This means no new gaothan development schemes are coming up in the region anytime soon. Also, residents in these areas are of the view that they receive discriminatory treatment, at the hands of the development authorities. The Bombay HC order, to restrain the BMC from acquiring any gaothan properties, came after a petition was filed in the HC, stating that gaothans were being treated as ‘slums’, to be developed under the guise of slum redevelopment projects.

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Category: Lifestyle