CDA faces revenue shortfall due to expired lease agreements

CDA faces revenue shortfall due to expired lease agreements


ISLAMABAD: The Capital Development Authority (CDA) faces a loss of around Rs 2 billion due to non-extension of 900 lease agreements.

According to official documents, the lease agreements of 982 plots, including 407 commercial, 345 industrial, 155 agriculture and 75 government plots, have expired.

The expired lease agreements include category III plots for industrial use, shopping centres in marakiz, petrol pumps, agro farms and an IT centre.

In routine, the authority allots a plot on a lease of 33 years, which is extendable for two further terms of the same period.

As per land disposal regulations of the CDA, the lease holder is bound to seek extension of lease agreements from the CDA once the term of lease expires. However, the aforementioned figures show that a large number of expensive properties are being occupied by lease holders without renewal of lease agreements.

"The lease holders are bound to pay extension charges at the time of the renewal of lease agreements and the cash strapped CDA can fetch billions of rupees under this head, but we do not have a clear policy in this regard," an officer of the CDA said.

"We are missing around Rs 2 billion due to non-renewal of 982 expired lease agreements of commercial properties," he said.

Another officer, inside the CDA, said that there were multiple reasons behind the non-renewal of lease agreements. "Most of the plot owners have built additional structures beyond permissible limits and in violation of the agreements they signed with the authority. After committing building bylaws violations, the owners usually avoid contacting the authority as they fear of heavy fines by CDA on the said violations."

In the past, the matter was placed before the CDA Board by the Estate Management Directorate with the aim of reducing the number of expired lease cases pending with the authority and to retrieve billions of rupees in revenue.

The said summary suggested that the expired leases of commercial properties would also be extended whose owners had committed by-law violations. However, such renewals were to be conditional and the owners were going to be asked to submit affidavits that they would voluntarily remove violations on their respective properties within 30-day of renewal of their agreements with the CDA.

In response, the CDA Board turned down the summary proposing a one-time waiver of penalties regarding the extension of expired lease agreements for hundreds of commercial properties.

The board members were of the view that after getting such a relaxation, the violators could sell their properties without any loss or fear of action. They also feared that such a practice will set a bad precedent.

Talking to Daily Times, a CDA official said: "The higher ups of CDA are reluctant to take strict action because the people in question are mostly property tycoons."

"The authority should adopt a clear cut policy in this regard and allow renewal with building bylaws violations. Otherwise, it should cancel all expired leases," he said. Some of the leases expired 20 years ago, but the authority has done nothing so far against the defaulters. The civic authority has only published advertisements in newspapers and asked lease holders to seek their extension. CDA can receive billion of rupees by devising a workable policy to renew expired leases.