An overview on Transferable Development Rights in the State of Telangana and Andhra Pradesh

Origin of TDR:

The concept of transferable development rights (“TDR”) was introduced in 1916, in New York City, following which many of the countries across the globe followed suit. In India, TDR has been implemented in metropolitan cities such as Mumbai, Bangalore, Chennai and Kolkata.

TDR provides an additional built up area to the landowner in lieu of the landowner relinquishing / surrendering land without any cost to the local body / urban development authority for public purposes such as road widening, open spaces, parking spaces, parks, etc.

The State of the Telangana also adopted the concept of TDR[1] vide the building rules notified under Government Order bearing GO Ms. No. 168, dated April 7, 2012 and amended by GO Ms. No. 330, dated December 28, 2017 (“TS Building Rules”) which inter-alia govern the rules in respect of the TDR.

Grant of TDR Certificate:

Rule 17 of the TS Buildings Rules makes provision for awarding TDR certificates[2]. A TDR certificate  is issued only to the landowner, when the land is transferred to a local body / urban development authority for public purposes without any cost, by way of registered Gift Deed[3]. Further, TDR is not allowed for unauthorised buildings / structures / constructions and is considered only after the land is vested with the local authority / urban development authorities.

Circumstances for Issuance of TDR:

 The circumstances whereby the landowner can avail the benefit of TDR are outlined below:

• The government prepares the master plan for the urban areas for carrying out developments and infrastructure for public purposes and for the same, it may require acquisition of the land for road widening, for construction of parking complexes and parks. In such situations, it becomes compulsory for the local body / urban development authority to acquire land from the landowners for the aforesaid purposes. Acquisition of land under the land acquisition procedure may result in the government paying higher compensation and can impasse the construction and development for many years and the landowners’ land can get locked under the land acquisition proceedings. Therefore, to avoid cumbersome procedure for acquisition of land, the local body/urban development authority has introduced the concept of issuing the TDR to the land owners, pursuant to issuance of TDR, the land owner is entitled for construction of 2 (two) additional floors over the normal permissible floors without insisting for additional setbacks, in the remaining area of the site, or on the other property owned by the land owner within the concerned local body area, subject to compliance of the other norms or sell the TDR granted to the land owner to a person interested in buying the TDR. If the land is acquired from the landowner for road widening, the local body / urban development authority will consider for grant of TDR equivalent to 400% (four hundred percent) of built up area of such area surrendered/relinquished[4];
• No building activity is allowed on the beds of lakes / water bodies / nalas foreshores, wherein the land owners has to leave 30 (thirty) meters from the full tank level boundary of lakes / water bodies / nalas foreshores and the land of 30 (thirty) meters left will be used for recreational buffer development with greenery, etc. In case, if the land left for buffer development is developed by the land owners, the local body / urban development authority will consider for grant of TDR equivalent to 200% (two hundred percent) of built up area of such recreational buffer area developed at land owner cost[5];
• The land owners developing the parking complex alongside of main commercial roads, city centres, close to bus stations, railway stations and any public transport system so as to encourage parking facility, etc, then the local body / urban development authority will consider for grant of TDR equivalent to built up area of such parking complex / or area of a parking lot as the case may be; and
• The land is acquired from the land owners in and around the heritage buildings and heritage precincts to preserve the value and beauty of the heritage building and heritage precincts and for maintaining the heritage building and heritage precincts for adaptive reuse, in such cases, the local body / urban development authority will consider for grant of TDR equivalent to 100% (one hundred percent) of built up area of such site area[6].

Tatva Legal, Hyderabad has a specialized team of lawyers who, amongst other services, advise on real estate transactions covering various aspects of the transaction such as general real estate transation adviosry services, cross border real estate transactions and title due diligence.

However, it is pertinent to note the land owner has the right to either ask for compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 or accept compensation by way of TDR certificate.

The High Court of Telangana in the case of A. Devender Reddy v. State of Telangana[7], has held that  

“if the land owner not willing to avail the benefit under the Telangana Building Rules by accepting the compensation offered by the GHMC by way of TDR, the GHMC shall necessarily follow due procedure prescribed under Section 147 of the Hyderabad Municipal Corporation Act 1955, which mandates issuance of the notice in terms of the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013”.

Sale of TDR:

The land owner who has been issued the TDR certificate can sell the TDR to a person interested in buying the TDR. There is no bar on the sale price of the TDR, as the pricing is purely driven by demand and supply and the land owner can sell it for any price. TDR can be sold in full or in parts and once the TDR is sold / utilized fully, the TDR certificate becomes null and void.

TDR Bank: The Greater Municipal Corporation of Hyderabad (“GHMC”) launched an online portal known as TDR Bank. Therefore, the landowners who have relinquished / surrendered the land for public purposes shall apply to GHMC for issuance of the TDR certificate. Upon issuance of the TDR certificate, the details of TDR certificate are uploaded online on the website of GHMC. The purchasers intending to purchase the TDR should approach the person holding the TDR certificate through online on the website of GHMC. GHMC has made it mandatory that the existing manual TDR certificate holders convert them into digital certificate to transact further online.

Conclusion:

In view of the above, the land owners who opt for obtaining the TDR, in lieu of surrendering the land for the purpose of road widening, to the local body / urban development authority have the following benefits: (a) they can either construct two additional floors over the normal permissible floors without insisting for additional setbacks, and/or, (b) if the land owners do not utilise the TDR for construction of additional floors, they can sell the TDR for higher price to the prospective buyers. T

he views and opinions expressed in this article belong solely to the author and do not reflect the position of Tatva Legal, Hyderabad.

[1] The Government of Andhra Pradesh has formulated the building rules vide Government Order bearing GO Ms. No. 119, dated March 28, 2017 (“AP Building Rules”). The provisions with respect to TDR are similar as in the State of Telangana.

[2] Rule 168 of AP Building Rules provides for awarding of TDR in the State of Andhra Pradesh.

[3] Stamp Duty applicable on the Gift Deed would be Rs. 100/- and Registration Fee would be 0.5% subject to minimum of Rs. 1000/- and maximum of Rs. 10,000/- on the market value of the property and shall be payable by the landowner.

[4] 200% in the State of Andhra Pradesh.

[5] 100% in the State of Andhra Pradesh.

[6] 100% in the State of Andhra Pradesh.

[7] W.P. No. 3944 of 2019, decided by the Telangana High Court on February 26, 2019.