How to borrow Home Loan on Unauthorized Property in Delhi NCR ?

Banks usually do not entertain application for Home Loan on Unauthorized Property. But, there are certain HFCs / NBFCs that provide Home Loan on Unauthorized Property.

What is unauthorized / unapproved Colony ?

Generally unauthorized / unapproved colonies are not included in the master plan. Disadvantaged urban middle class and urban poor people live in these colonies, which are similar to urban slums.

The purchase and sale of property in unauthorized / unapproved colonies is done by the General Power of Attorney (GPA), as these colonies are not considered part of the planned city.

Since unauthorized / unapproved colonies violate legal norms, the property owners of these areas do not have clear ownership of their land. In these circumstances, the GPA remains the only means through which one person empowers the other to manage his or her assets.

Although property in unauthorized / unapproved colonies (usually semi-pucca, two or three floor brick structures) are made of permanent materials like cement, bricks etc., the civic and social infrastructure suffer from a lot of problems.

Essential criteria for regularization of unauthorized / unapproved colonies

Regularization is the process whereby the property of unauthorized / unapproved colonies located there is registered, legal and official recognition is provided. There are many rules of regularization in the country. Like – 1. Having a Resident Welfare Association (RWA), 2. Having a layout of the colony with a complete detailed list of residents etc.

The application for regularization should include information such as colony boundaries, street names and neighboring areas. The RWA must submit land descriptions and undertakings that they will follow layout plans as may be approved with or without conditions, and that they will transfer any available land to the government to provide social infrastructure.

Benefits of regularization

1. Creation and development of better physical and social infrastructure, minimum civic services and community facilities.

2. Individual landowners having clear ownership of their land.

3. Development fees are levied for the development of colonies.

4. The land is re-designated as residential and individual plot owners gain clear ownership over their land.

5. Able to register Sale Deed and obtain clear title to property. Consequently, land transfers are done through registered Sale Deeds of transfer.

Regularization of unauthorized / unapproved colonies in Delhi

According to the State Government, there were 1,797 unauthorized / unapproved colonies in Delhi which have been regularized by the Center for the purpose of recognizing the ownership / mortgage / transfer rights of residents residing in 1,728 unauthorized colonies. But it excludes 69 “rich” colonies including Sainik Farms, Mahendru Enclave and Anant Ram Dairy.

What makes unauthorized / unapproved colonies more attractive ?

1. Due to the large scope of earning income from rent, there is a high demand for property in unauthorized colonies.

2. Property of unauthorized colonies is also considered suitable to conserve black money.

3. The Builder / Colonizer often invest heavily in anticipating the regularization of these areas, causing property prices in such areas to rise continuously.

4. Most of the unauthorized colonies are located close to the authorized (Posh) colony due to which the residents of the unauthorized colonies get structural benefits indirectly. For example, Uttam Nagar is near Janakpuri, Khirki Extension is close to Saket, Aya Nagar shares common neighborhood with Arjan Garh, and Rajiv Colony is located behind Rohini.

5. Apart from paved/pucca roads, proper water supply and electricity connections, gas lines have also been provided to local residents in unauthorized colonies due to a large vote bank.

Home Loan on Unauthorized  Property

Most Banks or HFCs do not provide Home Loan on Unauthorized Property, as problems like illegal construction, gross commercialization, poor infrastructure, etc. are found on a large scale in unauthorized / unapproved colony.

Since unauthorized colonies are an integral part of the city and a large number of people are moving to these areas due to better connectivity and comparatively lower property prices. As a result, high demand for property has led to huge construction work in the unauthorized colony.

As a result of all this, there is a huge demand for home loan on unauthorized property, colony or area. In order to meet the increasing demand for home loan in a unauthorized /unapproved colony or area, some Banks or HFCs or NBFCs offer home loan to a unauthorized / unapproved colony or area on certain conditions.

Required Documents for Home Loan on Unauthorized Property