The Maharashtra government has issued a final notification allowing the conversion of leasehold lands and Occupancy Class II lands to freehold status upon payment of a premium of up to 25% of the Annual Statement Rate (ASR) or Ready Reckoner (RR) rate of the land area. This move aims to grant full ownership rights to individuals, cooperative housing societies, and industries by replacing the existing leasehold system with freehold status.
The notification, released by the Revenue Department on March 4, 2025, outlines the revised premium rates for conversion, which will be applicable until December 31, 2025.
Understanding Freehold and Leasehold Land
In a leasehold system, the government owns the land and leases it to private persons, cooperative housing societies, or industries for a specified period. Ownership of leasehold land is subject to restrictions on transfer and redevelopment.
On the other hand, freehold land ownership provides full rights to the individual, cooperative society, or industry, allowing them to sell, mortgage, or redevelop the land without requiring government permission.
The latest notification allows leasehold and Class II landowners to convert their land to freehold by paying a percentage of the Ready Reckoner rate as a premium to the government.
Revised Premium Rates for Freehold Conversion
As per the government’s new policy, the premium rates for converting leasehold and Occupancy Class II lands to freehold status are as follows:
- Individual or Private Landholders & Companies (Residential Class II Land) – 15% of the ASR
- Cooperative Housing Societies (CHS) on Occupancy Class II Land – 10% of the ASR
- Self-Redevelopment Projects by Housing Societies on Occupancy Class II Land – 5% of the ASR (a reduced rate to encourage self-redevelopment)
- Leasehold Residential Land – 25% of the ASR
These revised rates are expected to ease ownership complexities for individuals and societies, making it easier for them to develop or sell their properties without restrictions.
Impact on Housing Societies and Property Owners
The decision to convert leasehold and Class II lands into freehold is expected to benefit:
- Individual landowners who have been seeking full ownership of their properties.
- Cooperative Housing Societies (CHS) that currently face restrictions in redeveloping their land.
- Industries and companies that own leasehold properties and want to unlock their full potential.
- Self-redevelopment projects, which will now benefit from a significantly lower premium of just 5%.
With leasehold restrictions removed, property transactions are expected to increase, bringing in higher revenues for the government and unlocking greater market value for property owners.
Conclusion
The Maharashtra government’s decision to allow the conversion of leasehold and Class II lands to freehold is a major reform that will simplify property ownership and boost real estate development. With a deadline set for December 31, 2025, eligible landowners are encouraged to take advantage of this policy and secure full ownership rights for their properties.
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