The Bangalore Development Authority (BDA) is set to crack down on allottees who have left their allotted residential sites vacant for years. The authority will now strictly enforce a one-time penalty of 10% of the plot's current guidance value on beneficiaries who failed to construct a house within three years of receiving the site. This move targets those who have benefited from massive land appreciation without fulfilling the core purpose of the allotment.
New Penalty Regime and Strict Enforcement
According to BDA officials, the new penalty regime, which came into effect on August 19, 2024, will be implemented rigorously. The most significant consequence for violators is that sale deeds will not be issued unless construction on the plot is completed. This measure aims to ensure that the original objective of providing housing to those without homes is met.
The penalty structure has been revised from a flat rate system to a percentage-based one. Previously, flat fines ranged from Rs 1.5 lakh to Rs 4 lakh depending on plot size. Now, the penalty is fixed at 10% of the prevailing guidance value, irrespective of the site dimensions. With soaring real estate values in Bengaluru, this translates to penalties running into lakhs and even crores in premium localities, causing significant concern among defaulting allottees.
Exemptions and the Root of the Problem
The BDA has granted exemptions for allottees in the Arkavathy and Nadaprabhu Kempegowda Layout (NPKL). Officials acknowledged that delays, ongoing litigation, and incomplete infrastructure in these layouts have prevented beneficiaries from starting construction, making the penalty unfair in these specific cases.
The core issue stems from BDA's historical allotment scheme, where sites were given at non-market rates to applicants who did not own a house. The agreement-cum-sale deed barred property transfer for a period, first 10 years and later reduced to five. While many built homes, several allottees from the 1960s and 1970s, who paid as little as Rs 5,000, left plots vacant. Today, some of these plots are valued at nearly Rs 10 crore, representing enormous unearned windfalls.
Legal Challenges and Additional Violations
The BDA's power to resume such sites for violations was restrained by court directions. Instead, the courts directed the authority to frame a penalty-based regularisation policy, leading to the current system. BDA Chairman Haris NA emphasized the clarity of the rule: allottees must build or face penalties, and sale deeds are contingent on construction completion.
The authority has also identified about 50 cases where allottees obtained sale deeds solely to secure e-khata (property ledger) but then failed to return to regularise the construction violation, continuing to enjoy ownership benefits. Furthermore, illegal transfers made during the restricted agreement period will face scrutiny and attract a steeper penalty of 25% on the transaction value for transferring sites without BDA permission.
With guidance values climbing sharply, the new penalties pose a substantial financial burden. An official cited the example of a Jayanagar allottee who could have regularised a plot for Rs 10,000 earlier but may now face a penalty of around Rs 1 crore. This has created major challenges, prompting the BDA to place the matter before its board for further review, where penalties could potentially be increased further.
