Mumbai is denying you the luxury of buying a new property by having exorbitantly priced real estate. Most of the people living in Mumbai live in houses that were bought long before prices skyrocketed or live in rent or in the Pagadi system. The Pagadi system is an old rental system followed in Mumbai since the time of World War II. It is very similar to the rental system that prevails worldwide, but the only difference is that the tenant also becomes a co-owner of the land.
The system protects the tenant more than the traditional rental system. The landlord will not be able to evict the residents easily and the tenant has the right to sell the house! The tenant has the right to the house but not to the land. The house can be sold to a new tenant for a percentage of the equity value and a percentage of the money earned goes to the tenant while the majority is returned to the owner. The tenant pays a nominal amount as rent to the owner of the land! Banks do not support this system of renting or buying a house, understandably!
This system causes a lot of legal problems, especially for the landlord, who has to go through a long and painfully cumbersome process if they decide to evict a tenant. In addition, the Rent Control Law had protected tenants who pay a fixed rent and also their right to the property rented by the Pagadi system is transmitted by inheritance.
However, the Maharashtra state government has now decided that it will no longer include residential properties under 500 square feet and commercial properties under 800 square feet under the Rent Control Act. This will directly affect the Pagadi residents of Mumbai who have been residing in the rented houses for years! Nariman Point and Marine Drive, two of Mumbai’s most expensive real estate spots, are dotted with Pagadi properties. It is estimated that a total of 52,000 people still live under Pagadi!
This is good news for landlords who will now have the power to enforce rent based on equity and taxes. It will also empower landlords to evict people if they can’t pay the property taxes the government intends to collect.
Although in a sense it seems that the unfair balance against landlords has come to an end, it should be noted that many of these Pagadi residents have also paid large sums of money to their landlords and asking for more would put them in danger. a tight spot. The solution would be for the landlords to take the remaining money and register the property in the name of the tenants.
The residents of South Mumbai will be the most affected by the change in legality as many properties are under the Pagadi system.