TAMIL NADU RENT CONTROL

ACT AND ITS IMPLEMENTATION:

DONE BY:
SOMREETA DAS
12AR60R35
1
ST
YEAR; M.C.P.
BATCH: 2012-14
A L O C A T I O N - S P E C I F I C A N D T I M E L I N E
B O U N D C A S E - S T U D Y O F C H E N N A I
SCENARIO OF CHANGING LANDUSE AND LAND PRICE
IN CHENNAI URBAN AGGLOMERATION.
P L ANNI NG L E GI S L AT I ON AND P R OF E S S I ONAL P R ACT I CE
( T e r m P a p e r )
I . Tami l Nadu Rent Control Act: A bri ef
i ntroducti on.

I I . The Changes i n Land use and Land pri ce: A
case study of Chennai Urban agglomerati on

I I I . Analysi s of MARKET, POLI CY & Act and thei r
di rect i mpact on the Land use and Land
pri ce changes.

I V. Establi shment of i nterrelati onshi p between
Land use and Land pri ce wi th respect to the
clauses i n the Act.

V. References and Bi bli ography.

VI . Appendi ces.
APPENDI X I
APPENDI X I I
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9 10
5 6
2 4
1
7
~ C O N T E N T S ~
1
T a m i l N a d u R e n t C o n t r o l A c t :
A b r i e f i n t r o d u c t i o n .
SOURCE:
a. http://en.wikipedia.org/wiki/Tamil_Nadu_Buildings_%28Lease_and_Rent_Control%29_Act,_1960
b. http://www.lawsofindia.org/pdf/tamil_nadu/1960/1960TN18.pdf
PROVISIONS: as per Tamil Nadu Rent Control Act (1960; Amend. 1973)

Annual rent can be 10 per cent of total cost of the house at the time construction.
Maintenance charges can be 10 per cent of the rent.
Tenant also needs to pay the owner for property tax.
Additional 15% rent for a furnished house.
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 enacted as the 18
th
Act of 1960
and implemented with complete mandate as per the 23
rd
Amendment Act of 1973 was
an attempt by the Government of India to eliminate the exploitation of tenants by
landlords. Rent legislation tends to providing payment of fair rent to landlords and
protection of tenants against eviction.
From time to time, a few amendments have been appended to it. The Amendments
appended included :
Amendment Act 2 of 1962,
Amendment Act 11 of 1964,
Amendment Act 23 of 1973.
As per the Act (with all amendments appended), ensured the following provisions:
Herein, a trend of misinterpretation intended or non-intended was initiated. The further
supplementary Guideline Value For Land Price Policy added to the pool of loopholes
within the Tamil Nadu Rent Control Act and over the years it added to the woes of the
tenants in the economic groups of the LIGs, UMIGs and MIGs who resided in the Chennai
Urban Agglomeration.
As maintenance charges (10%) and additional rent for furnished house (15%) came to be
interpreted as mandatory increment in rent, the plight of the tenants worsened over a
considerably shorter span of time.
Instead of mitigating their problems, the counteracting clauses of the Act and the policy
vied to create an unique yet uncomfortable system of landuse land price interrelated
pattern.
This pattern makes the possibility of prediction of changes in either landuse or land price
based on projection of existing and prior land market assessment of this city quite difficult
and undecipherable as has been discussed in the further sections of this paper.
2
T h e C h a n g e s i n L a n d u s e & L a n d p r i c e :
A c a s e s t u d y o f C h e n n a i U R B A N
A G G L O M E R A T I O N .
LAND USE PATTERN:
Significant changes in landuse pattern could be observed from comparison of the existing
landuse plan (2006) and the proposed landuse plan (2026) for Chennai U.A. by the CMDA.
The proposed landuse plan has been devised after careful consideration and projection of
the existing trend of landuse and changes occurring in past 5 years.
The CMDA had observed during a period of 2006 to 2011 that:
There was a significant increase in the mixed use typology (residential & commercial)
that intended to replace complete residential landuse soon. These were observed in
sectors that had more population density or greater percentage of LIGs and EWS
population composition. This was done as these economic classes couldnt aspire to
derive proper revenue through housing/ real estate schemes in these localities.
The decentralization of population towards the suburbs largely along the ECR (East
Coast Road) transport corridor as these areas had lesser land prices and had been
further devalued after the natural calamity of Tsunami (2004)that struck this zone in full
force. This enabled the central core to be re-valued for commercial purposes and
development of Special Economic Zones (SEZs) and Commercial Hubs/ Corridors, as per
requirement.
Development of Green Corridors at intervals and their well-connected network along
transportation corridors within the city instead of just green pockets.
Augmentation of natural water supply by encouraging development of water tanks/
ponds/ storage reservoirs (at ground level) instead of naturally founded watersheds. This
enabled runoff reduction, stormwater channelization and improved watershed
management that also enabled natural Rain Water harvesting to be incorporated.
The same was projected and hence the existing landuse plan (2006) got modified to the
proposed landuse plan (2026) in the year 2008. (See APPENDICES I &II)
Meanwhile land price started posing a alternating periodically changing trend of landuse.
Usually land price should affect landuse, but the case of Chennai was different.
Of all the factors determining the land price, as quoted by the Industrial & Economic Planning
Division of TCPO in their 2008 Working Groups Report, some of them had major role to play in
the land price shaping for the Chennai Metropolitan Area. They were:
Recent Development of Service Sectors (accelerating increase),
Inherent Value (abominable charges levied)
FAR Revisions (high-rise structures in vogue)and
Speculations (huge number of migrants on current date, highest rate of urbanization)
These factors in turn prompted unnatural changes in the locational advantages and the Land
Use patterns. The factors that determine land price have been discussed on the next page.
3
FACTORS DETERMINING LAND PRICES:

Locational Advantage: Whether the particular land is adjacent to the main road or other
important roads, near to the public utility places constructed by the urban local bodies,/
development authorities / municipal corporations at the government cost of the public
exchequer.
Land Use: The value of land significantly increases as the land use assigned to a parcel of
land in the plan changes from low importance to a higher importance like from public street
or park and open space to a institutional or commercial or official etc. The land owners
thus benefit or suffer from the somewhat artificially determined and externally imposed
factors by which they are bound even without there will.
Amenities: The cost of the land changes from the provision of infrastructural facilities by the
urban local bodies / urban developmental authorities or other service providing agencies in
terms of facilities like road, transport, communication, water supply, sanitation, electricity,
power etc.
Inherent Value: It is related to the build ability of building potential of the land in an urban
area.
Floor Area Ratio (FAR): It is an important factor determining the market value of any land.
For example, if the planning authority increases the FAR, the market value of the land almost
doubles; if it is increased three times, the market value also trebles and so on. The owners of
the land have no contribution, whatsoever, that would justify there appropriating all the
benefits arising from the enhancement of FAR for themselves.
Speculation: Generally it is called scarcity value. Whenever the demand is higher than the
supply, speculation arises. The fast rate of growth of population and the development in
urban areas leads to a migratory movement of people from rural areas to cities, the
demand for serviced land perpetually out strips its supply leading to ever rising price of land.
Whenever there is a scarcity, there is a speculation and therefore, it would not be incorrect
to conclude that urban land prices include high degrees of speculative factor.
Black Market: There is no secret that black market value of any piece of urban land is far
more than its value in the legal market, mainly for exemption of stamp duty, income, wealth
and other taxes. There is thus, a significant black market component attached to the
market value of urban land, as specified in the documents in the records of sale transaction.
Changes in Interest Rate: Decline in the interest rate in the formal banking system is also
another important factor for changes the price of land. It is an inverse relation, that is,
decline in the interest rate in the banking system leads to enhancement of investment in real
estates and which in turn increases the price of land and vice-versa.
T h e C h a n g e s i n L a n d u s e & L a n d p r i c e :
A c a s e s t u d y o f C h e n n a i U R B A N
A G G L O M E R A T I O N .
4
SOURCE: http://www.commonfloor.com/realestate/guideline-value-for-land-chennai
GUIDELINE VALUE FOR LAND PRICE IN CHENNAI

Guideline Value for Land in Chennai is the value of the land as determined by the Tamil Nadu
Government, based on its own metrics of facilities and infrastructure growth in that locality.
The Guideline Values are revised periodically to have them in sync with the Market Value.
Registering at a value higher than the Guideline Value will not automatically result in the new
value being adopted as the Guideline Value. But such an action can trigger a review process
to revise the Guideline Value. Guideline Value for Land Chennai is available on the site Link.
If Guideline Value for Land Chennai is much higher than the Market Value, the issue can be
brought to the notice of the IG of Registrations for review and correction.
Guideline value register is available with the Registering officer. Chamber of Commerce,
other Associations, Agricultural Associations and Panchayat Unions are provided with a copy
of these guideline registers. Ascertain the guideline value of the property and the stamp duty,
registration fees etc, to be paid from the Registering officer. Guideline Values in respect of all
areas in Tamil Nadu have been revised with effect from 1-8-2007.
Recent Development of
Service Sector:
The rapid growth of
Information Technology
(IT), Information
Technology Enabled
Services (ITES), Business
Process Outsourcing
(BPO), Foreign Direct
Investment and other
service industries handled
by the multinational
companies requiring lot of
space in the urban area.
These companies are
purchasing the land at a
higher rate than the
market forces of demand
and supply of land. This in
turn leads to increase in
the price of land.
T h e C h a n g e s i n L a n d u s e & L a n d p r i c e :
A c a s e s t u d y o f C h e n n a i U R B A N
A G G L O M E R A T I O N .
Source: http://www.zamanzar.com/Chennai/Commercial-Property-Prices.html
Source:
http://www.zamanzar.com/Chennai/Commercial-
Property-Prices.html
5
Excessive monthly increase in land price itself prompted widespread mixed-use typology
and decentralization as will be analyzed on next page.
Here, as observed from the graphs, that in both months of January 2013 and February 2013,
there was a significant appreciation in monthly price index whereas the year-on-year
movement portrayed more depreciation in January 2013 than in February 2013.
If the graphs were to be
observed carefully, the monthly
price index portrays a significant
depreciation from February 2012
till July 2012, then witnesses a
very small appreciation till
September 2012 and then
depreciates marginally till
November 2012 where from it
starts appreciating again till
February 2013.
This indicates a significant
sinuous curve being formed with
peaks and valleys, alternating,
validating the fact that land
price undergoes alternative
patterns of appreciation and
depreciation within this period.
JANUARY 2013
Monthly Trend:
appreciated by 4.4% in
the last one month.
Quarter Analysis:
appreciation of 3.7%.
Year-on-Year Movement:
has dropped by 4.4%.
FEBRUARY 2013
Monthly Trend:
appreciated by 4.5% in
the last one month.
Quarter Analysis:
appreciation of 11.9%.
Year-on-Year Movement:
has dropped by 1.9%.
SOURCE:
http://makaaniq.makaan.com/property-prices-in-chennai-appreciate-
by-45-in-february-2013-says-makaancom-property-index.html
RENTAL SCENARIO IN CHENNAI
Rental prices in cities are one of the main factors for influencing the urban land prices in
urban areas of the world. There is a direct relationship between the rental prices and
residential land prices.
Due to the development of industries, mainly small, medium and large, urbanisation, fast
development in tertiary sector, especially in information technology, various policies
introduced by the government from time to time like special economic zones, export
promotion industrial parks, industrial growth center schemes etc., in Chennai leads to
expansion of income in multiplied effects which created a profit hunting rental business
among the landlords.
Thus, landlords having land at core activities area in cities constructed houses and rented
them at maximum rate and it became a steady positive growth business.
A n a l y s i s o f M A R K E T , P O L I C Y & A c t :
t h e i r d i r e c t i m p a c t o n t h e L a n d u s e a n d
L a n d p r i c e c h a n g e s .
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A n a l y s i s o f M A R K E T , P O L I C Y & A c t :
t h e i r d i r e c t i m p a c t o n t h e L a n d u s e a n d
L a n d p r i c e c h a n g e s .
The main reason behind the demand for rental housing was :
The large inflow of educated middle income and salaried people and
Technically educated job seekers from rural and other small towns, who are not having
enough money to pay the exorbitant rent rates in the posh areas and bungalows and
cannot afford to live in slums so as to maintain standard of living which compelled
them to take rental accommodation within the city.
Of these two categories of people residing in the rented accommodations, the second
group was the worst affected after the 2007 amendment of guideline value
implementation for land price that directed at finding a loophole in the Tamil Nadu Rent
Control Act wherein a hike of about 10% of the rent every alternate year was made
mandatory for long-term tenants (residential nature) and about 12.5% (commercial
nature).
In order to know the rental position in Chennai city, officials of the Industrial and
Economic Planning Division of Town and Country Planning Organization, collected the
information regarding commercial land prices in 21 selected localities during their visit.
The information regarding the rental structure is mainly divided in to two main classes
namely residential and commercial. The commercial section is again divided in to two
called office and retailing.
From then on, the Industrial and Economic Planning Division of Town and Country
Planning Organization continually updates their observations in the TCPO journals and
the current observations of Chennai as recorded by them are as follows:
Residential: The percentage of rental to percentage of owned land holdings had
considerably reduced within the period of August-September, 2012 (high land price as
seen in graphs on previous page); landuse as allocated for this type had either reduced
or been converted to mixed-use typology or commercial uses. Similarly during the price
fall period of February July 2012, the rental percentage to owned percentage went up.
This might have been as a result of the migrating population being largely composed of
the UMIGs and HIGs (employed in service based activities)or due to the fall in the rental
prices as more people opted for land ownership.
Commercial: The percentage of rental to owned went up with fall in pricing index and
vice versa with rise in the price index. This was due to the fact that commercial land is
always costlier than the residential type. Hence fall in price index implies devalued land,
that may be bought and utilised based on future land price speculations. However
increase in price index implies lesser affordability to buy land as per square feet cost
escalates at an accelerating rate.
SOURCE: www.tcpomud.gov.in
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E s t a b l i s h m e n t o f i n t e r r e l a t i o n s h i p :
b e t w e e n L a n d u s e a n d L a n d p r i c e w i t h
r e s p e c t t o t h e c l a u s e s i n t h e A c t .
As a result of the situation ensuing, as mentioned in the previous sections, the need to
corroborate land price and land use became quintessential.
The following changes could be observed as a result of this trend :
Whenever land price escalated beyond a breakdown point of the economic
structure, number of tenants substantially increased amongst the migrating masses.
Thought the rental amount in the central core city remained quite high, people
started to recede farther away from the city and settle in the suburbs & a gradual
shift/ decentralization followed.
An abominal increase in rent within the central city and also the immediate suburbs
reversed the action as had been taking place as mentioned in the previous point.
Henceforth, an equilibrium condition in the rental amount between the core area
and suburbs is attained. Hence, to delegate and preserve the economic potential
of the core city area, another trend of land price depreciation is induced as a
result of which people start investing in the land market considering the future land
price potentials. Hence, the number of land holdings increase and also the number
of land owners increase portraying a significant shift in the land-ownership pattern.
As a result of these two aforementioned processes being continuing, the land-ownership
pattern witnesses significant shifts and this also generates a considerable amount of
revenue and economic gains for the housing sector and real estate industries.
The limitations of this process may be negligible but are as follows:
The LMIGs who arrive to the city in search of job opportunities or in pursuit of
education. Their affordability is not at par with this volatile process of turnover
mechanism of generating revenue.
The need of BPL and LIG inclusive planning projects are often neglected and
procrastinated as they play no significant role in this process, where the major
stakeholders are the UMIGs and the HIGs of the city.
The United Nations Global Strategy for Shelter in the year 2000 mentions that the greatest
failure of developing countries in the housing sector has been their inability to stimulate
an adequate supply of affordable and serviced land in most of the developing nations in
the world.
This and similar argument form part of a considerable debate that centers on whether
the urban poor have less access to land today than in the past. This clearly showed the
fact that the land value is inflation prone and whether the price or the rent, neither
comes down without a substantial downfall of economy of the city or without either the
rental or the owned land holdings witness substantial changes in their number.
8
R e f e r e n c e s a n d B i b l i o g r a p h y
Bertaud, Alain; Buckley, Robert; and Owens, Kate. 2003. Is Indian Urban Policy
Impoverishing? Washington: World Bank Urban Symposium.
Chennai Metropolitan Development Authority. 2005. Second Master Plan for
the Chennai Metropolitan Area. Chennai: CMDA.
Chennai Metropolitan Development Authority. 2004. Development Control
Rules for Chennai Metropolitan Area. Chennai: CMDA.
Dowall, David E. 1995. The Land Market Assessment: A New Tool forUrban
Management. Washington and Nairobi: Urban Management Program.
Dowall, David E. 2003 (June). Chennai Urban Land Market Assessment Study
Design and Scope of Work. Prepared for the World Bank.
Energy and Infrastructure Unit, South Asia Regional Office. 2002. India: Urban
Sector Strategy. Washington: The World Bank.
Evenson, Norma. 1989. The Indian Metropolis: A View Toward the West. New
Haven: Yale University Press.
Malpezzi, Stephen; and Bertaud, Alain. 1999 (January). The Spatial Distribution
of Population in 35 World Cities: The Role of Markets, Planning and Topography.
Paper presented to the American Real Estate and Urban Economics
Association, New York.
Mills, E. S.; and Tan, J. P. 1980. A Comparison of Urban Population Density
Functions in Developed and Developing Countries. Urban Studies 17: 313321.
Dowall D. E. and Monkkonen. P. 2007 (February).Chennai Urban Land Market
Assessment. Working Paper prepared for the South Asia Energy and
Infrastructure Department, World Bank.
Srinivasan. S and Rogers P. 2002 (June).Land Use Change in Developing
Countries. DEAS/HUCE, Harvard University, Cambridge.
http://www.seas.harvard.edu/TransportAsia/Presentations/HUCEJune02c.pdf
http://www.iurd.berkeley.edu/publications/wp/2007-02.pdf
http://en.wikipedia.org/wiki/Tamil_Nadu_Buildings_%28Lease_and_Rent_Contr
ol%29_Act,_1960
http://www.lawsofindia.org/pdf/tamil_nadu/1960/1960TN18.pdf
http://www.cmdamaps.tn.nic.in/
9
A p p e n d i c e s
SOURCE:
http://www.cmdamaps.tn.nic.in/
APPENDIX I.
10
A p p e n d i c e s
SOURCE:
http://www.cmdamaps.tn.nic.in/
APPENDIX II.