Vacant Bangalore Development Authority sites: Slab-based penalties replace 10% levy

Bengaluru: The Bangalore Development Authority (Bangalore Development Authority) has revised the penalty imposed on owners who fail to construct houses within the stipulated five-year period under lease-cum-sale agreements. Moving away from the earlier flat 10% levy mooted in Sept 2024, the authority recently introduced a graded penalty structure ranging from 2.5% to 10%, depending on site size.The move comes in the backdrop of criticism from site allottees, who maintained that a uniform penalty of 10% of the prevailing guidance value for vacant sites was too steep and did not take into account variations in site dimensions or individual financial constraints. Following public objections and representations, the matter was placed before the authority's board, which approved the revised slab-based structure.
A senior Bangalore Development Authority official said, "There are many sites in the city where there is absolutely no construction, and earlier they were paying only Rs 1 lakh to Rs 5 lakh as penalty. When we increased the rate uniformly to 10%, there was strong opposition. After considering representations, we rationalised the structure. This revised slab system should benefit both the public and the authority. Whatever penalty is collected is utilised only for Bengaluru's development."The official added, "The new system aims to bring proportionality, with smaller site owners benefiting the most from the reduced rates."However, the revised penalty will not apply to allotments in Nadaprabhu Kempegowda Layout and Arkavathy Layout.A notification issued by Bangalore Development Authority on Feb 11 reads: "In cases where construction was completed after the five-year deadline, the penalty will be calculated based on the guidance value prevailing on the date of construction. If the guidance value for that period is unavailable, the rate mentioned in the lease-cum-sale agreement will be considered. In such cases, the marginal cost of funds-based lending rate (MCLR), along with an additional 2% interest, will be applied from the date of agreement. Alternatively, the penalty may be calculated based on the current guidance value and site area, with the lower of the two amounts being collected."Allottees unwilling to pay the penalty may surrender their sites to Bangalore Development Authority, with 12.5% of the amount paid being deducted and the balance refunded. Those who consent to pay must clear their dues within 90 days, failing which interest at SBI's MCLR plus 2% will apply. The authority clarified that the revised rates will not apply to those who have already paid the earlier 10% penalty; no refunds will be issued.Bangalore Development Authority commissioner P Manivannan emphasised that the move was not an individual decision but a collective one. "This is a decision of the board, represented by chairperson NA Haris."