What are unauthorised and illegal colonies in India?

What are unauthorised and illegal colonies in India? Should you buy or invest in a property in an unapproved colony? What are the risks involved? There are many unauthorised colonies in Delhi. The poor infrastructure and living conditions in these colonies has become a political issue. We’re going to talk about unauthorized colonies. can we invest in unauthorized colonies or not? Can we invest in GPA property? In this Article, we’ll mainly focus on unauthorized colonies. What are the risks involved? Actually, what is the concept of it? How are they different from authorized colonies? Which approving agencies are there? Are these approved colonies? If not, then why are these not approved? And if these many people are living in these then how are they living? So we’ll clear all this confusion in this Article.

What does an unauthorized colony mean?

Let’s understand What does an unauthorized colony mean after all? What is its concept? Assume any private builder or government agency wants to develop a colony, then it acquires the land first. Assume this is agricultural land. Any private developer or government authority wants to develop a colony, then it’ll first take the CLU approval, change of land use. So in CLU basically you have to take approval for non-agricultural. The second step is to get the layout approved. Whenever the plotting is done then the layout has to get approved. And the third step is to get the building approved according to the building bye laws. So one, two, three, it’s mainly a three-step process.

So in the case of an unauthorized colony, all three steps are skipped. So what will happen? A developer will directly do the plotting in agricultural land without approval and will sell those plots to another person. We saw that no approvals were taken. So CLU approval wasn’t taken, the layout wasn’t approved. After that, the buildings will not be approved. Because whoever buys the building there, he won’t take any approval and he won’t be able to get one because, the status of the land is still agricultural land and in agricultural land any kind of residential development or any kind of construction can’t be done in a legal way.So in an unauthorized colony, once the plotting is done, so after that illegal construction is done and buildings are made.

So if we say in summary then unauthorized colonies are basically made upon agricultural land. Its status is still agricultural land on papers. And no change of land use approval is taken in non-agricultural. layout approvals aren’t taken and building approvals aren’t taken. In an unauthorized colony, property registration is not done. So basically, you don’t have to pay registration charges and stamp duty. So this is also a big reason that in unauthorized colonies people buy properties because it’s cheaper there and they don’t have to pay stamp duty and registration charges.

How is the property sold here?

Generally, the property is sold on GPA. GPA means general power of attorney.

 Important features of unauthorized colonies

  • So first it has poor development in it. If you look at all the unauthorized colonies then roads will be quite narrow. You can look here also that neither is any footpath left, nor there is any space for drainage on the sides. Poor road connectivity, roads are in bad shape generally. You can see there is no proper road here.
  • Water connection problems happen. Water isn’t supplied on time. In fact, in a lot of colonies, three is no water facility whatsoever. There is no sewerage infrastructure. You can see there are no sewers in this colony.
  • After that, lack of social infrastructure. Because these are illegal colonies so no one plans for parks, no one plans for schools or hospitals. There aren’t any kind of community areas. That’s why development is very poor in unauthorized colonies.
  • Hygenic conditions get quite bad too. And building bye laws aren’t followed at all as I’ve talked about before. because approvals for buildings haven’t been taken. Means they won’t be given cause it’s an unauthorized construction.
  • A lot of rules are flouted there. If the rules aren’t followed then it can be dangerous. See if the streets are this narrow if any fire hazard happens, fire brigade won’t be able to enter such places.

So these are the important features of unauthorized colonies….

 how unauthorized colonies get developed?

Now let’s talk about how these colonies get developed? If these are unauthorized and illegal then why doesn’t the government remove them? How are these many colonies made so freely? So there is a very big reason. Assume, in a city there is a single government agency that does all the development authority work, all the development of the city is its responsibility. If there is no private participation, In that case what happens? Demand is quite high in some cities.

If I give you the example of Delhi, the demand has been quite high in the past 40-50 years and if we talk about DDA, Delhi Development Authority, it could not generate that much supply, which was the housing demand. So that’s why some private players developed colonies illegally, sold the property there and a lot of people live there now. They can’t be removed overnight and it’s a big political issue. We’ll know about particularly Delhi case in detail. Another big reason is that the land in unauthorized colonies is very cheap. Because no approvals were taken, right! No land was left for social infrastructure, all the land is sold, so the land is sold at cheaper rates.

If DDA sells the plot after approving the land, then they’re expensive. In unauthorized colonies, plots are cheaper. This is a big reason that people buy land or property in unauthorized colonies. As I talked before that there is no kind of approval, no layout, building, or change of land approval is taken. So turn around is quite fast. There is no wait. The land is bought and sold immediately. Bought the land from farmer, made plots, and sold them. Whoever bought the plot, made the building on it. Because approval takes a lot of time, it doesn’t take much time and all the work is quite fast. That’s why, which work DDA couldn’t do alone, that’s why in fact, it was the inability of the government in a way. That’s why a lot of illegal colonies have developed in Delhi. And in many places all over India, illegal colonies are there on today’s date.

Cases of Unauthorised colony in Delhi

Now we’ll take Delhi’s case. Understand it as a case study, that what happened there? On today date, there are more than 1600 unauthorized colonies in Delhi. Around 30% of Delhi’s population lives in unauthorized colonies. And if we include the slums then around 50% population of Delhi, lived in slums and unauthorized colonies. That’s why it’s a quite big political issue. All political parties want to regularize unauthorized colonies, they talk every time, but anyway. The goal of this ARTICLEis not to talk about political issues. But we’re talking about unauthorized colonies so I thought I should mention this. 895 colonies out of the 1600+ colonies that we’re talking about were about to be regularized, but the matter is stuck currently. Because DDA was the only development agency in Delhi for 40-50 years, DDA was developing. but DDA didn’t have the speed compared to the demand. The demand in Delhi is around 100,000 units per year. But the supply done by DDA is around 10,000 so 10,000 flats come in a year or two. So they definitely can’t match the demand. So it should have happened? Private players should have been legally allowed so that the demand can be met. But I think they’re moving in the right direction. In DDA also DDA has launched a land pooling policy. So in Delhi private parties are also being involved. So this was Delhi’s case particularly. These kinds of cases are in other places also. But because Delhi is the capital and its issue about unauthorized colonies rises a lot. So I mentioned it here in detail…

Pros and cons of buying property in unauthorized colonies

Now let’s talk about the pros and cons of buying property in unauthorized colonies. Let’s talk about the pros first. So the biggest benefit is that you get a lot cheaper property. If we compare to approved colonies, so you get approximately a 50% rate of the property. Assume a property of 1 crore, is in the nearby approved colonies, a property of the same size, you’ll get in 40-50 lakh in unauthorized colonies. So this is a big reason. Affordability is a big factor so people buy houses in unapproved colonies. Second, you don’t have to pay the stamp duty. Stamp duty now is 5-6% if I talk about Delhi. If the property is of 1 crore, then 5-6 lakh is just the stamp duty. So that 5-6 lakhs is your savings. These two are the main reasons why people buy houses in unapproved colonies.

But it also has its drawbacks. I’d say three are a lot of risks. So if you can afford then you should definitely buy houses in approved colonies. Now, what are its risks? First of all, the title is not transferred legally. because in the unapproved colony, the property is sold on GPA and the title is never transferred from GPA. You’ll get a lot of details about the pros and cons of GPA in it. After that, there is poor infrastructure and no civic amenities. I’ve already talked about it before. You are seeing I’ve put a picture. You can see drains aren’t properly maintained. In fact, this road is quite new too. Some infrastructure development is happening in a few colonies. But you won’t get civic amenities. There are no good schools, hospitals. Or there are no markets or parks available.

So I’d say this is a big loss in unauthorized colonies. Parking is a big issue. See the roads are so narrow if you park here then there won’t be any space for vehicles passing through. So parking is a big issue. Yeah in some places people make parking on the ground floor. So it’s a big issue. Especially in big city parking becomes a huge issue. If we talk about Delhi. Then safety is a big issue in unauthorized colonies because, there is no guard or gated community. So safety and security become big issues. And if lower strata are living there then it can be a big security issue. Banks don’t offer loans.

See I’d say it’s a big loss because if you buy a property of 40-50 lakhs and you have to pay all of it in cash, or you have to pay from even your savings, people don’t have that much money readily available, and the loans facility is not available in unauthorized colonies. So this is a big loss. Doing a background check becomes very difficult. Now actually, As I said before in GPA actual title ownership is not getting transferred, right? So who was the actual owner at the start? Whom did he sell to? Collecting that complete chain is very important if you invest there, which we call chain of title, right!

Yeah, if there is any land dispute or the government acquires the land so according to the land record whoever is the real owner he’ll get the money. People who bought it through GPA, won’t get the money. So these were pros and cons related to unauthorized colonies I hope that if you’re thinking of doing an investment or buying a house and you’ve thought about unauthorized colonies also then do remember these things. Buy the property while being careful of the risks I’ve told you. And if possible if you buy in approved place then it’s better.

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