The recent decision of the Maharashtra government to scrap ULCRA has focused much attention on this law that governs housing prices in India. Read on to know more about this law and its implication on property prices.
India has one of the highest real estate prices in the world. This has primarily been due to shortage of land available for development and booming demand. As the demand for property in India far exceeds supply, property prices here have sky-rocketed. The shortage of available land was created because of the law called ULCRA.
What is ULCRA?
ULCRA stands for Urban Land Ceiling and Regulation Act. It was a law passed in 1976 in order to create social equality with the aim of preventing profiteering and hoarding of urban land available in the market, as well as to avert urban congestion. Urban cities were divided into categories like A, B, and C. A ceiling was put on the highest permissible usage of land by the corresponding owners and this was fixed as per the provisions in the act.
How does the ULCRA affect the land prices?
ULCRA placed a limit on the land available for development which meant that land was available but at a steep premium. When the land owners sold their land to construction companies, they charged abnormally high prices. The builders in turn passed on these exorbitant prices to the buyers, leading to a sharp rise in housing prices.
With the scrapping of ULCRA by the Maharashtra government, will the property prices in Mumbai reduce?
The recent decision by the Vilasrao Deshmukh government to scrap ULCRA is believed to stabilize property prices in Maharashtra. Industry watchers don’t see an immediate drop in the prices but think that the new supply will bring uniformity in property prices. There won’t be any significant changes in housing prices in the prime areas but the move will affect the prices in other areas. Construction companies say that the scrapping of ULCRA will usher in an era of mass housing projects. They say that they would now be able to save substantially on the money spent in order to obtain permission for land development under ULCRA. These savings would then be passed on to the customers, who will be able to procure housing at affordable prices.
Do you think the government of Maharashtra did the right thing by doing away with ULCRA or do you think policymakers had good reason to establish this law in the first place? What should the government do to make housing affordable for the masses? Do you think you will personally benefit from the revocation of ULCRA?
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