The State government will be tabling an amendment to the Bruhat Bengaluru Mahanagara Palike Act (BBMP), 2020 to regularise the collection of ground rent with retrospective effect.
The Cabinet on Thursday gave its approval for the provision that was sent by the Urban Development Department (UDD). The amendment will stop the BBMP from paying nearly ₹2,300 crore to builders. The builders had earlier approached the High Court (HC) challenging the ground rent system, and the court termed the system “illegal” and directed the BBMP to return the money to the builders.
According to sources in the real estate community, the BBMP collects ground rent from builders for them using public space to dump construction material. This, along with scrutiny fee and various cess, is linked to the guidance value of property.
The civic body was collecting ground rent even when the builders did not dump construction material on footpaths and public spaces maintained by the BBMP, the builders contended.
Now except those building independent houses in small sites, the bigger realtors constructing group housing projects no longer dump construction material on public spaces.
A builder who petitioned against the practice in the High Court argued that collecting ground rent from builders when they did not utilise public space was illegal.
A BBMP official talking to The Hindu said to avoid payments owing to insufficient funds in the coffers, the Town Planning Department proposed to bring an amendment to the BBMP Act, 2020 to make this provision with retrospective effect.
The State government favoured this proposal and the approval was given in the Cabinet.
However, the builders said the government may now make a provision in the Act with retrospective effect, but they argued the provision would remain “unfair” as it was levying ground rent on builders who do not use public spaces. The amendment is likely to again face legal challenge, sources said.
