As the 22-year-old Urban Land Ceiling Act (ULCA) is scrapped today, projects will develop at a faster pace, prime land in prominent areas will be released, and developers will pass on the benefits of speedier approvals to consumers, said Anuj Puri, chairman and country head, Jones Lang Lasalle Meghraj, in a statement released to the media.
The statement reads:
The central government had not considered states like Maharashtra and Andhra Pradesh when it repealed the ULCA in other states like Gujarat, Karnataka and Punjab. It had its reasons, but it became evident that the ULCA rendered valuable land useless for all practical purposes. In India, land constitutes approximately 50 per cent of the price of real estate.
Now that the Urban Land Ceiling Act is repealed, considerable portions of land will be released in central areas of cities. However, these are out of the reach of middle-income buyers to begin with, so they will not benefit. The land locked under the ULCA and now being reverted to its owners has appreciated in tandem with market dynamics since the passing of the Act, 22 years ago.
Now that the act is scrapped, projects will come out at a faster pace, and developers will pass the benefits of speedier approvals on to the consumers.
In any case, repealing the Urban Land Ceiling Act was definitely the need of the hour. While it was certainly envisaged as a means of protection to landowners, it has not served any of the purposes for which it was created. By repealing this archaic act in all states, the government has assured that the real estate sector will grow by at least 14 per cent by the year 2011-12. Real estate’s contribution to the national GDP so far has been about 11 per cent. With the scrapping of ULCA, this figure will increase substantially.