BS Reads: Why buying property in Kashmir may not be as easy as it looks

Multiple claims over the same real estate, doubling of official circle rates and issues regarding sale of industrial land are key hurdles 'outsiders' could encounter

By repealing 12 laws and amending 14 others, the Modi government has in a single stroke thrown open the purchase of land, property and quite literally everything else under the sun in Jammu & Kashmir to people who are not ‘state subjects’ or ‘permanent residents of the union territory.’ Business Standard had earlier reported how land prices have been more than officially doubled by the administration over the past year to entice locals to sell their holdings. With the new changes, that process might just be set in motion – literally opening the floodgates to individuals and businesses from outside.

While claims have been made that agricultural land won’t fall in the hands of people outside the state, there are provisions that could enable farmers from other states to buy farm land in the UT. With laws that restricted the size of land holdings repealed, the gates could be thrown open to large-scale farming in the valley. Industrial land can now be leased, acquired and sold by a newly established corporation – a departure from the past and a possible bone of contention with the erstwhile state’s industrial policy. And although there has been a massive drive to digitise land records over the past year, including translating property and land titles recorded in Persian to Urdu and English, Kashmir is still a place rife with multiple claims over the same property.

Can everyone buy agricultural land in Kashmir?

While most people have interpreted new laws as barring the sale of agricultural land to ‘outsiders’, it doesn’t make it impossible for people from other states to buy farm land in Kashmir. The new laws state that agricultural land in the UT cannot be transferred to a non-agriculturist. An agriculturist has been defined as a person who has been cultivating land in J&K. However, the powers to define an agriculturist in the near future have also been vested with the government. This effectively means that if required, the government can through exercise of its powers, confer the title of agriculturist to any farmer or any person in India which would make him eligible to own agricultural land in Kashmir. There is another catch. The powers to classify agricultural land as non-agricultural has been vested with the district collector. With anyone from India now permitted to buy non-agricultural land in the UT, any future re-classification of land can further open avenues for people across the country.

Are there restrictions on the amount of farm land that can be bought in Kashmir?

In the previous dispensation, there were restrictions on the amount of agricultural land locals could hold in Kashmir. Earlier, nobody in Kashmir could hold more than 182 kanals (about nine hectares). Sale of agricultural land to outsiders was prohibited except in the vicinity of places that were to be developed as health resorts or commercial centres. Even with this exception, no more than four kanals (less than half a hectare) could sold to ‘outsiders’ for the purpose. By the repealing the Big Landed Estates Abolition Act 1950, the Modi government seems to have paved the way for unfettered acquisition of land without any upper limits. The new laws provide for consolidation of fragmented land holdings with the stated objective of making agriculture more sustainable. If the administration in the future allows agriculturists from outside the state to lap up land in Kashmir, this could open the gates for farmers from states like Punjab and Haryana, majority of whom have expertise in large scale farming unlike agriculturists from the rest of India. A new revenue board has been set up to facilitate consolidation of land in Kashmir.

Can everyone now buy a house or land in Kashmir?

Without delving into the intricacies of the new laws, the answer is yes. All laws have been modified to omit the domicile clause for property rights in the valley. This effectively means that anyone with enough money to spend can now technically buy property there. Earlier, a certificate to prove oneself a state subject was required. With that requirement gone, the process is quite like buying property elsewhere in the country. The administration earlier this year hiked stamp duty rates by as much as 20 per cent. That means buying land and property would certainly be much more expensive than in the previous dispensation. However, land records have been digitised on a massive scale and properties can now be registered online like the rest of the country. However certain real estate agents in Srinagar said that there are still duplicity and multiplicity in many property records – effectively multiple claimants to the same property. This would still mean navigating potential landmines for those not familiar with the local property landscape in the valley. In October a new department meant exclusively for registration of land, hitherto absent in the UT was established. Moreover to make it easier for buyers, the powers of dispute resolution have also been transferred from the lower judiciary to the state’s executive. This would effectively speed up property title disputes in the valley.

Can businesses buy industrial land in Kashmir?

As a matter of fact, not even locals or erstwhile ‘state domiciles’ could buy industrial land in the valley. The situation is likely to remain the same at least till 2026 when the Jammu and Kashmir Industrial Policy 2016 expires. According to this policy, land classified as industrial can only be given on a 90-year lease to others. The erstwhile state had identified 2,500 acres of land outside urban areas to develop industrial and IT parks. The policy provided encouragement to local industrialists to develop estates of minimum five acres and IT parks with a minimum area of two acres, but did not prohibit industrialists from outside the state to lease land. They could do it through the district collector. The amended law gives that power to the newly established Jammu and Kashmir Industrial Development Corporation (JKIDC). It has been given the power to “acquire and hold such property, both movable and immovable as the corporation may deem necessary for the performance of any of its activities, and to lease, sell, exchange or otherwise transfer any property.” By the looks of it, there is an inherent conflict between the 2016 policy and the new law. It remains to be seen how this potential conflict would be resolved by the administration as investors start showing interest in the state.

Is real estate in Kashmir cheap?

Quite the contrary. Earlier this year with the massive hike in stamp duty rates, official circle rates have almost doubled in many districts of the Kashmir division. Realtors and locals confirm that actual land and property prices are still way above the official rates. There is a ban on distress sale of properties – which were often sold cheaply by Kashmiri Brahmins and others who left the valley in the wake of sectarian tensions in the 1990s. However with official circle rates increased in many areas where prices have been traditionally depressed would entice locals to sell. Now low income group housing and residential units for economically weaker sections have been thrown open to this category across India. Earlier these were reserved for state subjects. There is also the question of security, which still continues to be fragile in the valley. With security of investments still not guaranteed, apprehensions about putting one’s hard earned money would persist in the times to come.

The Key takeaways of the new J&K Land Regime

• Agriculture land can be sold to farmers not residing in Kashmir: The power to define agriculturist and reclassify farm land as non-agricultural land has been left to the state govt 
• Unfettered acquisition of farm land without any upper limit now allowed to facilitate consolidation of fragmented land holdings to make agriculture sustainable
• Multiplicity of land records makes real estate deals risky, but early dispute settlement is likely as such powers are now transferred from local judiciary to the state govt
• Sale of industrial land will be conducted by the J&K Industrial Development Corporation, though its powers to sell land parcels to industry may be in conflict with the 2016 J&K Industrial Policy that expires in 2026