Thousands of housing societies across Greater Mumbai are set to benefit from a significant policy shift after the Maharashtra government revised how rent is calculated on long-term government-leased land where contracts have not yet expired. The decision, formalised through a recent government resolution, is expected to ease financial pressure on more than 3,000 residential societies occupying state-owned plots in the city and its suburbs.
Government land in Mumbai is commonly leased to cooperative housing societies and private entities for periods ranging from 30 years to as long as 999 years. These parcels, classified as Occupancy Class II land, were historically allotted to specific social groups, including former public servants, freedom fighters, journalists and artists. While such plots carry restrictions on sale and transfer, they form a substantial part of Mumbai’s residential fabric. Until now, lease rents were revised based on the full market value of land, determined using prevailing ready reckoner rates. This approach led to sharp rent escalations after 2012, particularly for long-term leases that had crossed the 30-year mark but were still active. Housing societies argued that the methodology created financial strain and inequity, especially when compared to properties where leases had already expired and been renewed under different terms. Under the revised policy, lease rent will now be charged only on 25 per cent of the land’s assessed value, with the remaining 75 per cent recognised as the leaseholder’s share. The change follows a recent interpretation by the Bombay High Court and was approved by the state cabinet earlier this month. Officials said the adjustment aims to correct disparities that emerged under earlier valuation rules.
An official familiar with the decision said the earlier framework had unintentionally penalised long-term lessees whose contracts were still running. “This revision aligns rent calculation with judicial guidance while restoring a sense of fairness among housing societies,” the official noted. The resolution clarifies that for leases where annual rent revision dates fell on or after January 1, 2012, the revised formula will apply from that date. For earlier periods, the older rates will continue to be used. In cases where lease rights have been transferred, unearned income will be recovered from the current occupant, and the lease will be formally transferred in their name. Urban policy experts view the move as a pragmatic intervention in Mumbai’s complex land governance system. By easing recurring costs for cooperative housing societies, the policy could free up funds for maintenance, safety upgrades and energy-efficient retrofits areas critical to building resilient, inclusive and low-carbon neighbourhoods.
While the reform does not alter ownership rights or land-use restrictions, it signals a shift towards more predictable and transparent urban land management. For residents navigating rising living costs in India’s most expensive city, the revised lease rent framework offers timely relief while reinforcing the role of fair taxation in sustaining civic infrastructure.
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Mumbai State Slashes Rent For Long Term Leased Housing Society Plots Across
