What is Pagdi system?

Pagdi system law is a little complicated one. It was a concept which was introduced in the pre-independence era; the pagdi system rules were such that no rent agreement was required between a landlord and a tenant. The tenant would pay the landlord in full and in return got rent receipts as acknowledgement. It was more prevalent in cities like Mumbai, Delhi and Kolkata. 

There are certain sets of rules which are followed in the pagdi rent system. These rules are inclusive of ownership rights of pagdi system tenants:

• There are no leases or agreements between landlords and tenants

• The tenants has certain rights over the property but not the land of the property

• Tenants can sublet the property by themselves under certain conditions

• The tenant has the right to sell the property upon mutual agreement with the landlord and he/she has to share a certain part of the profit with the original owner, i.e. landlord

The pagdi rent system was legalised by the government of Maharashtra back in 1999 under Maharashtra Rent Control Act. Lately, there have been talks around pagdi property redevelopment in Mumbai suburbs and some benefits have been proposed. According to the proposal tenants in non-cessed buildings shall receive new flats when the building is redeveloped. The landlords will get additional construction rights on half the area which he needed to rehabilitate existing tenants to recover construction cost and profit share.

The state governments are trying their best to bring the pagdi system into the existing guidelines of RERA, however, only time will tell if the government and pagdi landlords and tenants reach a consensus.

The Pagdi System is one of the oldest practices in cities like Mumbai. As everyone mentioned above, the pagdi system is a form of leasing in which the tenant co-owns the space rather than the land. Let me share with you the

latest news on Pagdi System in Mumbai:

• Renters in Pagdi are worried about their rights as tenants because of the state government's incompetence in a significant lawsuit against the Property Owners' Association. A nine-judge Supreme Court constitutional panel is scheduled to hear the case in the mid-week of April.

• The government intends to put abandoned and old structures under Mumbai law's Pagdi system and bring them under the RERA Act of 2016.

• Under the Pagdi system, the government planned to rebuild old buildings. Although they will pay for the renovation, it might not be sufficient to purchase a new home.

These are the latest news I came across regarding the Pagdi system in Mumbai.

Pagdi System Rules in Mumbai

The following are the general rules under the Pagdi system house in Mumbai:

• Tenants pay the landlord a one-time lump sum amount known as the "pagdi" in addition to rent under this system.

• There could not be a formal agreement between the landlord and the renter because the Pagdi system is normally an informal arrangement.

• If both the tenant and the property owner agree, the tenant may sell the property.

• The renter and the landlord may take up the responsibility for maintenance and repairs for the property.

• Tenants cannot be evicted by their landlords without a valid reason. Moreover, the Rent Control Board typically resolves disagreements between them.

I hope you get an idea of what is pagdi system in Mumbai.

The

pagdi system meaning

is a unique significant rental system that has been prevalent in cities like Mumbai, Pune, and Kolkata. It is a token amount or key money paid by a tenant to the landlord in exchange for the right to occupy a property.

Key features of

what is pagdi property

:

1. Token Payment

   : Under this system, tenants pay a one-time lump sum amount to the landlord when they move into the rented property.

2. Low Monthly Rent

   : tenants pay a lower monthly rent compared to the market rates. This lower rent does not change significantly over the years.

It involves long-term tenancy agreements, which last for several years or even decades.

• Tenants can't be evicted without specific legal grounds.

• Family members of the tenant can inherit the tenancy rights.

In recent years, there have been efforts to bring it under the purview of the Rent Control Acts.

This is

pagdi property law

.

 Read more

Before 1999, there was no requirement to sign a lease agreement with the landlord. This is why the Pagdi System, a sort of tenancy, developed in the past. The whole thing was done with rent receipts. The rents would remain constant throughout time because prices had never impacted them. So if you want to know about the Pagdi System Act, read the following paragraph.

Is Pagdi system legal?

The Maharashtra Rent Control Act of 1999, which became operative on March 31, 2000, gave the system legal status. According to this Act's Section 56, which includes the following:

1) The tenant's right to demand payment as a condition of giving up, selling, or assigning his tenancy of any property by the renter or any other party involved in making choices on his behalf.

2) The tenant, or any person acting on their behalf, is entitled to any outstanding, premium, or similar payment, reimbursement, or other benefits in connection with the granting, renewal, or consent to nomination, renewal, authority to licence, regenerate, or approval to the commission, renewal.

What are Pagdi System ownership rules?

• No leases or agreements exist between tenants and landlords.

• In terms of the property, the renters do have some rights, but not in terms of the land.

• Renters may choose to manage their own property in several situations.

• The tenant has the option to sell the property, but only if they agree to split the money with the landlord with the landlord's approval, who is the real property owner.

• The condition of the property is also important when deciding Pagdi system property valuation.

I hope you understood Pagdi System Act with this answer.

I encountered the phrase "Pagdi" while researching real estate-related business for investment purposes. I had heard about the pagdi system previously. Although there are changes in the

new law for pagdi system and

there may not be many renters under the pagdi system now, it has been a common and distinctive tenancy form in India since before independence. It is similar to conventional rental agreements in that there is a renter and a landlord involved, and the rent is nominal compared to market rates. The distinction is that the renter is also a co-owner of the property and has the ability to sublet and sell the property.

Latest update on pagdi system sale of property

The adoption of the new Model Tenancy Act of 2021 of the

Maharashtra Rent Control Act pagdi system,

won't have any impact on or worry the tenants now residing in the decaying Pagdi dwellings, despite the majority of recent news about them continuing for regrettable reasons. The new law does not include current rental agreements in its scope. This means that current tenancies and related disputes will continue to be governed by the previous legislation even if the old act is abolished. The new Model Tenancy Law might formalise rental housing for individuals and stimulate more private investment, expanding a market with a potential value of roughly Rs. 3 lakh crores and boosting the country's economy. Additionally, this has the potential to rent out more than eleven million vacant homes, helping the Indian government achieve its goal of "Affordable housing for all by 2022." In more than seventeen states and union territories, adding the government's ARHCs or Affordable Rental Housing Complexes under PMAY-U or Pradhan Mantri Awas Yojana - The Urban programme has thus far received positive feedback from both private and public entities. This will guarantee that the Pagdi system's renter rights in Mumbai are protected and will also have long-term advantages for the rest of the country.

I hope now you have an idea of the

new law for pagdi system.

Hi Friend,

I am a property lawyer. I have well conversed with the Pagadi act. Hence, I am going to provide a few factors about the Pagdi system in India. Usually, I deal with clients who face Pagdi issues.

I have gone through Akarshit’s answer. I really liked the way he mentioned the rules of the Pagdi system of sale of property. As he mentioned that state governments are working hard to incorporate the Pagdi system into RERA's existing norms, but only time will tell if the government and Pagdi landlords and tenants can come to an agreement.

Hence, today I will discuss the Pagdi system's inclusion in the RERA Act now that you know what it is. The government is working hard to bring the Pagdi System-controlled buildings under the Real Estate Regulation (and Development) Act, 2016 (RERA), and give tenants protection and rent stability. 

Regarding the Pagdi system rules in Mumbai, the Maharashtra Housing and Area Development Authority, which collects taxes from these complexes, is responsible for redeveloping them. Around 16,000 houses in Mumbai, including Pagdi properties, have been halted for repairs.

To add more to what is Pagdi system in Mumbai, I would like to say that the 

• Mumbai Development Control and Promotion Regulations 2034 (DCPR) give proprietors of these structures substantial incentives to stimulate renovation. The total space necessary to rehabilitate the tenants determines the size of the incentive

• Other parts of the country, such as Chandni Chowk in Delhi, continue to practice this age-old custom dating back to the pre-independence era. It not only prevents the landlord from reaping the benefits of property ownership but also demotivates him from maintaining it

• In Mumbai, the Pagdi system assures that the rent for the property remains nominal regardless of inflation or other market swings. Tenants in Mumbai's Pagdi system pay rents as little as Rs. 500 for a property, with market rates reaching Rs. 60,000 or more

• This leasing arrangement has a number of challenges, the most significant of which being redevelopment. The builder collects his earnings and leaves after the units are completed and full ownership is handed to the landlord. The burden of upkeep is shared between the tenants, who are co-owners and share the housing finance

• Given the low rent, tenants are discouraged from performing any house maintenance, resulting in run-down constructions all around Mumbai. In Mumbai, there have been numerous stories of historic buildings collapsing and causing casualties

• The State Government and the tenants want an amendment in the Maharashtra Rent Control Act of 1999 to ensure that houses larger than 847 square feet and smaller than 547 square feet (the popular average of the houses under this system) pay market rents, roughly 200 times the rent paid under this system. This phase will ensure that these renters progressively transfer from their current situation to the proposed Tenancy Model by the Central Government

I would like to conclude my discussion about the Pagadi act. I hope this helps:)

Read More:

Pagdi system was a form of tenancy followed a long time ago in some parts of India. Before 1999, landlords and tenants didn’t get into a contractual agreement. Rent receipts were the only records that existed. In a pagdi system, the tenant and landlords are co-owners of the property and tenants have the rights to sub-let or sell the property based on certain conditions. The conditions stated that the tenant had to seek prior permission from the landlords and in case of a sale, the tenants shared 33% or agreed percentage from the sale price.

In a pagdi rental system, the landlord has lesser responsibilities and since there is lower rent, they end up neglecting the buildings for repairs and maintenance. A tenant, on the other hand, is a part-owner of the house but not the land. The tenants in some areas pay rent as low as Rs. 500 for a property which can fetch Rs. 50,000 to Rs. 60,000, as they have paid hefty amounts years ago, although there is no proof approved by government authorities to back those claims.

The latest talks regarding the pagdi system were seen in 2017 in Delhi, where the pagdi tenants were asked to vacate the premises. The move attracted backlash from approximately 10,000 shopkeepers demanding amendments in the Delhi Rent Control Act. Similarly, when the state government of Maharashtra proposed to do away with this traditional rental scheme, the state padgi tenants opposed it with an uproar.

The transfer of ownership in the pagdi scheme is based on the prior permission of the landlord. The profits are decided to be shared among tenants and the landlords according to the agreed percentage. However, there is no said system or law in place for transferring ownership in the pagdi scheme.