Ongoing confusion over LRS charges
14% registration fee for plot regularisation?
The confusion surrounding LRS for real estate ventures in Telangana persists, with the process moving at a very slow pace despite being underway for four months. This has led to growing concerns across the state. On the other hand, the Telangana government seems to be considering applying the LRS only to plots that were unsold in the layouts, suggesting that those who have already purchased and registered plots in real ventures may have to pay an additional 33% compound fee on top of the LRS charges.
According to real estate experts, this could affect many property owners who have already registered plots in these ventures. Official sources have revealed that out of the approximately 25 lakh LRS applications, less than 10% have been cleared so far. Both real estate companies and plot owners are now anxiously waiting for the resolution of the LRS process, unsure when it will come to an end.
Meanwhile, there is still no clarity regarding the registration of house sites in unauthorized layouts in Telangana. Despite the previous BRS government making efforts to introduce the LRS regulations, no final decision was taken on the registration process, which had been stalled since the introduction of the LRS in 2020. As a result, millions of people are still waiting for their house site registrations. When the BRS government allowed people to apply for LRS, there was a huge surge in applications statewide. However, even after the Congress government came to power nearly a year ago, the LRS issue remains unresolved.
Although Chief Minister Revanth Reddy’s government took steps to address the issue six months after coming to power, the LRS process continues to move at a slow pace. Officials are reportedly citing regulatory issues as the reason for delaying many of the applications.
In Telangana, the Congress government’s efforts to regularise layouts, which have been pending for nearly four and a half years, have yet to achieve the desired outcome. The government issued clear guidelines for LRS and directed officials to complete the regularization process within three months and clear all pending applications. To do this, the government set up special teams across four departments—Revenue, Municipal, Finance, and Registration—to review and approve the LRS applications in four phases.
During the previous BRS government’s tenure, a total of 25.7 lakh LRS applications were received between August 31 and October 31, 2020, in just two months. Out of these, 3.58 lakh applications were from the HMDA area, 1.06 lakh from GHMC area, 13.69 lakh from municipal corporations and municipalities, 6 lakh from village panchayats, and 1.35 lakh from Urban Development Authorities.
For individual house site applications, the government collected a fee of Rs. 1,000, while layout developer applications were charged Rs. 10,000. The government raised an estimated Rs. 450 crore through LRS applications. However, the LRS process came to a standstill due to pending court cases, and the progress has been delayed since then.
After coming to power last December, the Congress government decided to clear LRS applications without any legal hurdles. The government directed officials to review LRS applications and approve those that comply with the rules. As a result, senior officials began working on the layout regularization process at both the top and grassroots levels about four months ago.
However, there is still ongoing debate about the LRS charges and how much should be collected. The government is yet to decide whether to collect a fixed fee per square yard for individual house plots and layout plots, or if it should double the current 7.5% registration stamp duty to 14%.
There is also information that the government plans to prioritize the regularization of plots in layouts where no sales have occurred so far, without granting approval to all plots in unauthorized layouts. This would mean that only the unsold plots in these layouts will be considered for regularisation under the scheme.
According to officials, the latest LRS will not apply to plots that have already been purchased and registered. The government is reportedly planning to bring in new regulations allowing construction permits only for those who have already registered plots in layouts. In addition to LRS charges, a 33% compound fee will also need to be paid, according to official sources.
In the HMDA jurisdiction, 1,337 illegal layouts have been identified in areas like Ghatkesar, Shamshabad, Shankarpalli, and Medchal zones. Of these, 628 layouts have been deemed eligible for regularization, with 1.31 lakh plots in total. However, more than 40,000 plots remain unsold. The government believes that by offering LRS regularization for these unsold plots, construction can proceed smoothly without any future issues.
The inspection revealed that more than half of the 1,337 layouts in the HMDA jurisdiction did not meet the minimum required standards. Therefore, the government is considering strict action against real estate ventures that violate regulations. It was found that layouts were applied for in areas such as assigned lands, lake beds, and water resource zones, including FTL zone, which are against the rules. The Telangana government has decided not to consider these layouts for LRS regularisation.
However, officials are reportedly using the regulatory hurdles as an excuse to leave many LRS applications pending. There are around 25 lakh LRS applications in the state, but officials have yet to clear at least 10% of them. Whenever there is a small issue or doubt, the relevant real estate companies or plot owners are supposed to provide clarification and submit documents, but it seems that the officials are not taking any action in this regard.
Even though Revenue Minister Ponnala Srinivas Reddy instructed top officials and district collectors to expedite the clearance of LRS applications, it appears that little progress has been made. This has led to widespread speculation about when LRS will finally be resolved.
