Real estate news: Delhi may tighten property rules, make registration mandatory for builder–landowner agreements

The Delhi government is gearing up to amend property registration rules, under which agreements between landowners and builders may have to be registered with the sub-registrar’s office, Navbharat Times reported

Under the proposed system, a 1% registration fee may be charged on such agreements. The government believes the move could help reduce disputes over the division of property and ownership rights.

Navbharat, quoting officials, said that once the proposed changes to the Registration Act are introduced, signing such agreements only on stamp paper may no longer be enough. The agreement would also have to be formally registered.

Builder-landowner agreements to be registered

The proposed changes are aimed at reducing legal disputes related to property ownership and the division of built-up space in Delhi.

At present, particularly in cases involving smaller plots of around 80 to 100 square yards, builders often enter into agreements with landowners to construct three- or four-storey buildings. In many cases, these arrangements are made on stamp papers worth only ₹50 or ₹100.

Some agreements also include provisions for cash payments in exchange for a particular floor in the building.

The report quoting officials said such informal arrangements not only result in a loss of revenue for the government but can also lead to disputes between builders and property owners later.

Unregistered agreements could create problems during sale

Under the proposed changes, merely executing an agreement on stamp paper would not be considered sufficient. The agreement would need to be registered with the sub-registrar.

Failure to register it could create complications when a flat covered by the agreement is subsequently sold.

In such cases, the pending registration fee could be recovered later. This could result in an additional 1% cost for the buyer, officials said.

Delhi government plans tighter rules for GPA property transfers

The Delhi government has also taken a stricter approach towards property transfers through a General Power of Attorney (GPA).

Stamp duty may be imposed when property is transferred through a GPA to someone outside the immediate blood-relations category. The amount of stamp duty would be determined by the Collector of Stamps.

The Delhi government is also considering imposing a 4% stamp duty on GPA transactions as part of the proposed changes to the Registration Act.

Registration without Collector’s approval may invite penal action

According to an Indian Express report, a Sub-Registrar could face disciplinary action for registering certain power of attorney (GPA) documents without first obtaining an order from the Collector of Stamps.

Under the proposed process, the Collector of Stamps will have to issue a written, reasoned order within 30 days to determine whether a document qualifies only as a GPA or is liable for the full stamp duty applicable to a Conveyance (Sale) Deed. In exceptional circumstances, the decision-making period may be extended by up to three months.

Until the Collector passes the order and the applicable stamp duty is paid, such GPAs will remain ineligible for registration. Sub-Registrars who register these documents without sending them to the Collector for examination may face action.