HDA hikes rates manifold, to the dismay of ABAD

Builders reject the steep increase, say it will cause further real estate inflation

HYDERABAD: The Hyderabad Development Authority (HDA) has announced a three to four-fold hike in the rates, fees and charges of its planning and development control directorate, to the dismay of builders and developers.

The Association of Builders and Developers (ABAD) rejected this increase in fees and taxes, arguing that it would cause further real estate inflation and reduce the viability of their businesses.

"The HDA's track record shows that they have been collecting tens of millions of rupees every year as the external development charges [from the housing schemes] and betterment charges [from the commercial buildings] but it fails to provide water supply, drainage and road facilities," Zulfiqar Farooqi of ABAD told The Express Tribune.

"In fact, it spends those recovered charges on their salaries, their vehicles and foreign trips, while the builders have to pay for even the manhole covers."



Obtaining approval at the HDA general body meeting on January 24, the authority increased the external development charges (EDC) from Rs250 to Rs1,450 per yard of the saleable area in a housing scheme, to be implemented in two phases. In the first phase, until June, it will charge Rs 875 per square yard, while from July, the EDC charges will be Rs1,450 per square yard.

By the usual calculations, the EDC at the current rate comes to Rs726,000 per acre, covering 60 per cent of the area in an acre. Now, until June, builders will have to pay Rs2.541 million per acre, while from July, the HDA will exact Rs4.2 million per acre. Furthermore, an allottee of a 200-square-yard plot will be asked to pay an additional sum of Rs240,000 if the new rate is enforced.

Though the HDA is supposed to spend this fee on water supply, drainage and road projects for the housing schemes, builders and developers complain that these infrastructural facilities are seldom provided.

Requesting a withdrawal

In a letter addressed to Sindh Local Government Minister Nasir Hussain Shah on Friday, ABAD Hyderabad appealed to him to withdraw the increase in rates. ABAD vice-chairperson Faisal Moosa Memon reiterated the accusation that the sum collected for infrastructural development was rarely spent on development works.

He also pointed out economic stagnation and probable real estate inflation as more reasons to consider the withdrawal. He further requested Shah to give ABAD permanent representation in the HDA governing body.

Necessary expenses?

Meanwhile, HDA director-general Ghulam Muhammad Qaimkhani stated that by the HDA's estimate, the external development works require Rs1,450 per square yard, but it had only been recovering Rs250 since 2010, which he claimed was the main reason why the schemes remained incomplete.

Qaimkhani further maintained that the builders themselves charged allottees EDC at the rate of Rs1,450 but only paid HDA the rate of Rs250.

The HDA has also decided to increase its fee structure by 7 per cent to 9 per cent annually, since both inflation and the salary budget had increased manifold since 2010, while the fee structure had remained static.

However, the builders refused to accept the 'disproportionate' increase. "The HDA can't punish us for not increasing its charges for the last nine years," insisted ABAD's Kashif Shaikh.

He said that ABAD was ready to accept an annual increment of 7 per cent to 9 per cent in the authority's charges, but a 250 per cent to 300 per cent increase was not acceptable. "We will write to HDA to rationally revise the rates. We also have the option of litigation," he remarked.

Najamuddin Shaikh, the convener of ABAD's HDA sub-committee, told The Express Tribune that both sides had agreed to be flexible on the matter. He explained that a meeting between ABAD and HDA officials was scheduled for March 18, but was postponed due to the coronavirus outbreak.

A former senior official of the HDA, requesting anonymity, contended that the authority could not charge the new rates until the Sindh government notified the same. "But the HDA won't try to get the notification issued, so they can take hefty bribes for approving new cases at the old rates," he alleged.

A massive jump

HDA has also raised fees for the scrutiny and issuance of NOCs for the proposed layout plan, revised layout plan, demarcation layout plan, site plan, subdivision plan and amalgamation plan. For the proposed layout plan, the NOC will now cost Rs70,000 per acre instead of Rs20,000, while for the revised layout plan, the charges have risen from Rs10,000 to Rs35,000 per acre.

The charges for the conversion of property from residential to commercial, commercial to residential and commercial or residential to amenity have also been increased from Rs60 per square yard to Rs210.



Meanwhile, NOCs for CNG or fuel stations will be issued against Rs350,000, up from Rs100,000, while land conversion charges will be charged in addition to this.

Fees for NOCs for marriage halls, lawns and banquets will vary from Rs200,000 to Rs400,000. However, if the plot is above 1,000 square yards, HDA will charge Rs20,000 per 100 square yards besides a fixed fee of Rs400,000

The transfer fee of plots of HDA housing schemes has also been raised from Rs30 to Rs105 per square yard for residential plots, and from Rs50 to Rs175 per square yard for commercial ones.

Furthermore, for housing units or flats, the authority will now charge Rs21,000 per unit instead of the older rate of Rs6,000 per unit.

Published in The Express Tribune, March 21^st, 2020.