The Hindu : Karnataka / Bangalore News : Lock-in period for BDA sites reintroduced

Online edition of India's National Newspaper
Wednesday, Dec 21, 2005

Karnataka

Karnataka - Bangalore

Lock-in period for BDA sites reintroduced

Special Correspondent

Allottees can still avail themselves of bank loans for house construction

Bangalore: The Bangalore Development Authority (BDA) now stipulates a "lock-in period" of 10 years for house sites allotted by it in an effort to prevent speculative and benami purchase of plots sold by it.

But this need not prevent a genuine allottee from getting a bank loan, according to officials in some major nationalised banks.

According to one bank official, the loan will be sanctioned irrespective of the nature of the transfer agreement between the BDA and the allottee.

Most banks will be satisfied with the allotment letter from the BDA. But the loan repayment will have to start immediately as it will be taken for granted that the property transaction has taken place.

Some years ago, the BDA started executing absolute sale deeds in favour of the allottees. With many cases of allottees selling sites at a premium instead of owning the plots for their own use coming to light, the BDA has changed its rules.

Under the present arrangement, an allottee will have absolute right over the site only after the lock-in period of 10 years is over.

According to the BDA, the lock-in period means that the house site is in effect leased to the allottee for 10 years. The allottee can build a house and enjoy all rights just as earlier allottees did except that they cannot sell the site. "Banks give loans against leased property and the allottees will not have any problem in getting a loan to build their houses," a BDA official said.

Several house site allottees under the new lease and lock-in period arrangement have misgivings about their eligibility for loans on their property. Since most are from middle-income group, they cannot build homes without bank loans. Both the banks and the BDA have set their doubts at rest.

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