In a significant move for property owners in the national capital, the conversion of leasehold properties to freehold under the Land and Development Office (L&DO) is set to resume after a halt of more than three years. The central government's L&DO has decided to adopt the circle rates last notified by the Delhi government to calculate conversion charges, with the new system coming into effect from January 1, 2026.
End of a Long Wait for Property Owners
The development brings a major relief to thousands of residents who have been stuck in limbo since the L&DO paused all conversion applications in December 2022. The L&DO, which administers approximately 60,000 properties and controls nearly 7% of Delhi's land, had originally given out plots on lease for building residential colonies after Independence. These areas include prominent neighbourhoods like Defence Colony, Chittaranjan Park, and Lajpat Nagar.
According to an office order issued on Thursday, the circle rates—last officially notified by the Delhi government on September 22, 2014, along with any subsequent revisions—will be applied for all relevant L&DO processes starting next year. These rates will be used for determining conversion charges, land use change charges, and calculating ground rent or license fees.
How Will the New Calculation Work?
While the L&DO is yet to publish the detailed methodology, sources indicate that the conversion charge will likely be calculated as a percentage of the circle rate of land for the specific area where the property is located. The agency is currently finalising the comprehensive guidelines, which are expected to be released soon.
This marks a shift from the previous system. Until the pause in 2022, the L&DO was computing conversion charges based on its own internally determined land rates, which were last revised back in 2017. Under that old policy, charges for residential plots increased with the plot size. For instance, for plots between 50 and 150 square metres, the conversion charge started at 7.5% of the notified land rate for every square metre over 50 square metres.
Legal Pressure and Pending Applications
The prolonged suspension of the conversion process had led to legal challenges. The matter reached the Delhi High Court in 2024 following a plea by a property owner from Patel Nagar. During the proceedings, the L&DO informed the court that it was drafting a new Standard Operating Procedure (SOP) and revising the rates.
At that time, the office had a backlog of 246 pending applications. The court had expressed dissatisfaction with the delay and, in August 2024, ordered the L&DO to complete the revision within four months—a deadline the agency ultimately could not meet. The new order for 2026 effectively sets a fresh timeline to clear this backlog and streamline the process for future applicants.
Conversion to freehold is typically sought by owners before a property sale or transfer, as it provides greater ownership rights and simplifies transactions. The resumption of this process is therefore a critical administrative step for Delhi's real estate market, impacting a significant portion of the city's residential land.
