Can the authorities later demand extra money for a leased flat or plot

Can the authorities later demand extra money for a leased flat or plot? Learn what the rules say

Leasehold properties are typically granted for 90 or 99 years. After this period, the property must be returned to the government. However, the government may also allow conversion to freehold for a fee. Leases are typically granted in two ways: annual lease rent and one-time lease rent (OTLR). 

Can the authorities later demand extra money for a leased flat or plot? Learn what the rules say.

In cities like Noida, property buyers typically find properties on lease, not freehold. This raises the crucial question of whether the authorities can demand additional payments in the future after the lease deed is signed and payment is complete. Leasehold properties are typically granted for 90 or 99 years. After this period, the property must be returned to the government. However, the government may also allow conversion to freehold for a fee. Leases are typically granted in two ways: annual lease rent and one-time lease rent (OTLR). 

Can the lease rent be increased after allotment?

The Economic Times quoted real estate expert Sudhanshu Mishra as saying that if the government or authority leases a property for a one-time premium, and the lease deed does not provide for annual rent or future increases, the authority is not entitled to charge additional payments. According to the report, courts have repeatedly clarified that if both parties agree on a premium and no additional payment is stipulated, the authority cannot demand it later.  What does the law say? According to the report, under the Transfer of Property Act, 1882, annual rent is not required for a lease to be valid. A one-time premium paid at the outset is sufficient. The terms of the lease depend entirely on the notice, tender, and contract agreed upon by both parties. Noida Rules: Currently, only leasehold properties are available in Noida. The authority generally offers two options: 

• Lease rent payment every year.
• One-time lease rent, after which no extra rent is payable for the entire period.

If the lease deed clearly states that no additional fees will be charged after the one-time payment, the authority cannot change it later. However, if the lease deed already provides for periodic increases in the lease rent, the authority can do so.

A court in Rajasthan provided relief to buyers

In 1995, the Agricultural Produce Market Committee in Rajasthan auctioned plots on a 99-year lease. The terms only included a one-time premium. However, after about three years, the authority added an annual rent of 5% of the market value to the new lease deed. In this case, the Rajasthan High Court ruled in favor of the buyers, stating that it was wrong to charge an additional payment without a provision in the original terms.

What you should do: 

If you have leased property in Noida or any other city, it is very important to carefully read your lease deed and allotment conditions. During this time, only the pre-written terms will be valid.