Land Bill 2013 !!!!

LAND ACQUISITION, REHABILITATION AND RESETTLEMENT BILL,2013

After the food bill getting consent it was the time for the cloth bill but we skipped it and came to a land bill being executed. We should have moved in the sequence of ROTI, KAPDA and MAKAAN but nevertheless, I expect a cloth bill in the near future.
Jokes apart, lets see what this land bill is, and how will it affect the real estate industry.

On 29.08.2013 the Lok Sabha passed land bill with 216 "yes" on the bill.
The major highlights of the bill are as follows :-
- Compensation for the acquired land @ 2 times in urban areas and 4 times in the rural area of the market value of the land.
- Consent of 80% of land owners for private players and 70% of land owners for PPP for acquiring the land.
- If a SC or ST land is acquired, the owner will be provided the same area of the land being acquired or two and half acres land (whichever is lesser) at some other place. If the land losing family of SC or ST is migrated to another district then other rules of rehabilitation and settlement also applies.
- If acquired land is sold again at a profit more than 40% of the acquired value, the profit is to be shared with the original owners also.
- Bill applicable on acquisition of 50 acres in urban areas and 100 acres in rural areas.
- The bill gives the right to states to impose restriction on acquisition of agricultural cultivation land.

Impact on Real Estate Industry :-

A simple impact which anyone can analyse is that the new entrants in the real estate industry will have to pay much more than before for purchasing land more than 50 acres in urban areas and 100 acres in rural areas.
This would simply affect the big infrastructural projects being executed and if executed would come at a premium price tag. With the bill being passed even the cost of the smaller pieces of land, which do not come under the provisions of the bill , will see an upward movement.
One of the highlights of land bill requires the consent of 80% of land owners for acquiring land by private players and 70% in case of PPP. This point will surely delay the land acquisition process as getting consent from the majority land owners requires a lot of negotiation with a lot of people. And for every negotiation every owner might not be available. So one can expect a major delay in the launching of next big housing or infrastructure project. This will not affect the retail users and the investors but will surely be a tedious job for a developer to complete.
The rehabilitation and settlement clause of the bill is expected to add that extra penny to the total cost of a house for the investors and the end users. The extra cost which the acquirer incurs, apart from the new acquiring cost, in the the form of rehabilitation and settlement expenses will trickle down to the overall cost of the final property.Thus increasing the total cost of the finished product . i.e. an apartment or a plot or a villa or a floor.
The major hit will be on the the affordable housing projects, as these projects are mainly dependent on the low cost of land. In my opinion, the concept of low budget will disappear in the future or the benchmark of the affordable housing will increase.
The bill confirms transparency in land acquisition process and safeguards the interests and rights of the land owners both in rural and urban areas. The only positive point, I could make out in context of the real estate industry.
So, as per the consequence of the bill, real estate industry will see a price increase of as much as 25% - 30%. It is a good news for the pre-bill investors as their return on investments will also see a sharp upward movement if this bill becomes a law after approval from the Rajya Sabha and our honorable President.

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Thanks
Nirad K Singh