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Valuation of Flat for Sale Under Pagdi System I am tenant for 40 years
11-Aug-2023 (In Property Law)
Hi, I have a simple query. I am tenant of a flat under the pagdi system in Mumbai since the last 40 years. I have decided to sell this property, or rather transfer the tenancy / relinquish my tenancy to a buyer for which I have approached my landlord. My landlord has agreed to the sale and In fact has a few buyers who are ready to pay a fair value for the flat. The landlord also informed me that i should only be interested in the net value of the flat that I will get and the transfer charges of 33% he will adjust with the buyer who is his friend and whom he has a private understanding. My query is regarding the Valuation of a Pagdi Flat. Is there a seperate ready reckoner for valuing such properties? The normal ready reckoner does not mention about the sale of a pagdi flat by a tenant. As per the landlord, for a rental / pagdi flat a vlaue of 40% of the ready reckoner value of the flat is to be considered. Is this correct? Thanks in advance. Regards, Lydon
Pagdi system is alike any other renting system that is prevalent across the world. This “pagdi-kirayadar” system was launched before independence in order to avoid paying excessive taxes to the British. Under this system, verbal agreements played a major role in property transfers where in the tenants were given a slip of rent payment and further tenants made payments in full to the landlord.
Simply put, the system akin to any other renting system that is prevalent across the world i.e. landlord and a tenant. In this system the only deviating factor is that the tenant becomes a part owner of the house and not of the land. This tenant continues to pay rent to the owner as long as he is not sub-renting the premises. Additionally, the tenant has the option to sell the said property while giving a percentage of the gross amount to the owner. This percentage varies from anywhere between 30-50%.
Simply put, the system akin to any other renting system that is prevalent across the world i.e. landlord and a tenant. In this system the only deviating factor is that the tenant becomes a part owner of the house and not of the land. This tenant continues to pay rent to the owner as long as he is not sub-renting the premises. Additionally, the tenant has the option to sell the said property while giving a percentage of the gross amount to the owner. This percentage varies from anywhere between 30-50%.
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Adv. Siddhant Sharma
Delhi | 500+ Answers
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