Rules to buy land in Jammu and Kashmir relaxed: Should you invest, what is the fine print and other key questions answered

On October 27, the central government notified rules that allow outsiders to buy urban, or non-agricultural land, in Jammu and Kashmir. Earlier, only ‘permanent’ residents and those with domicile certificates were permitted to buy such land.

There is a background to the government action. Nearly a year ago, the region’s special status under Articles 370 and 35A of the Constitution was nullified and the state was split into the union territories of Jammu and Kashmir and Ladakh.

The amendments are not applicable to the union territory of Ladakh.

Article 370 of the Constitution had granted special status to the state. Article 35 A prohibited citizens from other parts of the country from buying land in Jammu and Kashmir. The Jammu and Kashmir legislature was allowed to define permanent residents of the state and only those eligible could purchase land or property.

Here are answers to some of the most important questions about the central government’s order concerning Jammu and Kashmir.

The government amended and notified land laws for the union territory of Jammu and Kashmir and omitted the phrase “permanent resident of the state” from Section 17 of the Jammu and Kashmir Development Act. This section deals with the disposal of land in the union territory.

This will pave the way for any Indian citizen to buy land and property in Jammu and Kashmir. Outsiders will now be able to purchase urban, or non-agricultural land. Contract farming will also be permitted on agricultural land.

The amended laws also do away with the curbs on purchase of farmland by non-Jammu and Kashmir agriculturists and do not impose any limits on the total area utilised for housing or even shops. Remember that these limits currently exist in other states such as Himachal Pradesh or Uttarakhand.

Land acquired by the government for industrial or commercial purposes can now be allowed to be disposed of or sold to anybody. Earlier, only permanent residents of the state could have bought this land.

The notification in both Hindi and English runs into 111 pages. The home ministry made several changes to the land laws, including one that allows the use of agricultural land for setting up facilities of public purpose.

The most important amendment has been made in the Jammu and Kashmir Development Act that deals with the disposal of land with the Centre. The phrase "permanent resident of the state" from Section 17 of the law was omitted.

Some amendments have also been made to the Jammu and Kashmir Development Act, 1970. The Centre has introduced Section 11A to the Act, which protects notified development zones from application of Land Revenue Act and Agrarian Reforms Act.

“Upon coming into operation of the master plan or a zonal plan, the land use permitted in the area covered thereunder shall only be as provided in terms of such master or zonal plan. The provisions of the Jammu and Kashmir Agrarian Reforms Act, 1976, Jammu and Kashmir Land Revenue Act, Samvat 1996 or any other law for the time being in force requiring any permission to change the usage of any land, shall not be applicable to any land so covered,” states Section 11A.

Some protection has been extended through amendments to the Jammu and Kashmir Land Revenue Act. Through the insertion of Section 133 H in the Agrarian Reforms Act, the Centre has completely barred the sale of agricultural land to “non-agriculturist”. That said, it has provided for several situations under which sale can happen.

It has said that such land can be transferred to government or “a company or a corporation or a Board established by or under a statute and owned and controlled by the government or a government company as defined in the Companies Act, 2013” provided it is used for ‘public purposes’. Such transfers can also happen in favour of public trusts for ‘charitable purposes’.

The government can also take a call on the transfer of agricultural land in favour of “a person or an institution for the purpose of promotion of healthcare or senior secondary or higher or specialised education”.

The government can “allow the transfer of land, as defined in the said section, in favour of any person, institution or corporation, for such industrial or commercial or housing purposes or agricultural purposes or any other public purpose as may be notified by the Government for industrial and commercial development of the Union Territory.”

Yes. The government has diluted restrictions on the conversion of agricultural land to non-agricultural land. Earlier, such conversion could only be done only with the permission of the revenue minister. It is now possible with the permission of the district collector.

There are some conditions though. A holder of any agriculture land can construct a house or erect farm building, grain storage, primary processing of agriculture produce, wells or tanks or make any other improvements thereon for residential purpose or agricultural improvement after securing the permission of the Tehsildar concerned. But the plinth area of such building or improvement shall not exceed 400 square meters in total.

Through the insertion of a new section, special protection has been given to grazing land or those that grow fuel and fodder, though they too can be converted only with the collector’s permission.

The Centre has also expanded Section 13, which deals with “permission to be taken for development” from the authority concerned. It has said the Authority may “declare any zone or part thereof as the development area for the purposes of this Act”.

The relaxations surely open up potential opportunities for the development-led economic growth J&K in the long term. But to expect a rush of investments right away is rich.

Remember, Kashmir is unlike other regions of India because of safety concerns owing to the cloud of terror. The COVID-19 pandemic has smothered tourism and travel.

Nonetheless, the new rules bode well for the hospitality and the tourism sectors followed by retail, entertainment, healthcare and education.

The Maharashtra government had announced last year that it was planning to buy two land parcels, one each in Jammu and Kashmir and Ladakh, before October 31, the day central laws are scheduled to come into force in the state, for construction of resorts. Karnataka government too had proposed a luxury hotel in the Valley.

Locals will certainly benefit from an increase in the value of their properties.

Property prices in major areas of Jammu and Kashmir are fairly affordable and range between Rs 2,200 per sq ft and Rs 4,000 per sq ft in Srinagar; Rs 2,400 per sq ft and Rs 4,000 per sq ft in Jammu and Rs 2,500 per sq ft and Rs 3,200 per sq ft in Baramula.

That said, it is still too early to gauge the real impact of this move on Kashmir's real estate market. As of now, it is still a highly sensitive region and security concerns may keep property buyers at bay.

As we said above, these are early days to predict how demand for real estate in J&K will pan out because it is still a highly sensitive region. It will take some time for all ambiguities to clear. “Even if some are keen to buy property there, they will closely watch the political scene unfold in the future before taking the plunge,” said Prashant Thakur, director and head – Research, ANAROCK Property Consultants.

Initially, real estate momentum may not be so much for residential real estate as in the hospitality sector. The region definitely has a large untapped potential in the hospitality segment.

Unless safety is given paramount importance, it is difficult for real estate activity to pick momentum here, Thakur said. Investors should therefore be extremely cautious before investing in these border areas because all said and done these are problematic geographies.

Experts say that unless and until the socio-political situation stabilises, investors would not jump at the opportunity. But gradually one may see investments coming into organized infrastructure development such as hospitals, schools, colleges, hospitals, hospitality, tourism sectors and eventually retail and entertainment. Food processing industries could also receive a boost, there could be some opportunities in the anvil for e-commerce players but for all that the purchasing power and the economy struggling with the effects of the pandemic, has to improve.