Noida Property Alert: Can Authorities Demand Extra Payments After Allocation?

In a recent landmark ruling in Rajasthan, the courts sided with leasehold property buyers when the government attempted to increase lease rent three years after allocation. The verdict clarified that once a lease is agreed upon for a one-time premium, the government cannot unilaterally raise rent unless the lease deed explicitly provides for it.

Understanding Leasehold Property in Noida

In cities like Noida, buyers often invest in leasehold properties rather than freehold ones. It is crucial for buyers to understand how annual or one-time lease payments work, and whether rent can be increased after allocation.

A lease agreement is typically granted for a fixed term, such as 90 or 99 years. After this period, the property usually reverts to the government unless a separate fee is paid to convert it to freehold. If a lease is granted against a one-time premium without recurring rent, authorities cannot impose additional financial burdens unless explicitly allowed in the lease deed or through mutual agreement.

Expert Insights

Sudhanshu Mishra, Principal Partner and CBO at Square Yards, explains: “When the government grants land against a one-time premium and the lease deed does not include a clause for periodic rent, it cannot later demand annual payments. The consideration under the lease is already final.”

Harsh Parekh, Partner at Khaitan & Co., adds that if auction or tender documents mention only a one-time premium and no recurring payment, any attempt to demand extra payment later is unlikely to succeed legally.

According to Sana Khan, Associate Partner at SNG & Partners, under the Transfer of Property Act, 1882, annual rent is not mandatory for a lease to be valid. The one-time premium paid at the start is sufficient to establish the lease.

Noida and Greater Noida Scenario

In Noida and Greater Noida, authorities generally follow a structured leasehold model, where land is allocated for 90 years. Buyers can choose between paying annual lease rent or a one-time lump sum lease premium. Annual lease is often calculated as a percentage of the premium and may be subject to periodic escalation as per allocation terms.

Mishra explains, “Buyers who opt for a one-time lease premium usually have no further annual lease obligations. Authorities cannot impose new charges unless the original lease deed allows it or the buyer agrees to modifications.”

Key Takeaway from Rajasthan Case

The Rajasthan government attempted to revise lease terms three years after allocation, introducing a 5% annual lease rent based on market value and periodic escalation. The high court struck down this demand, emphasizing that the conditions agreed upon at the time of allocation remain final unless the lease deed explicitly allows amendments.

This ruling underscores a critical lesson for leasehold property investors: the original terms of a lease deed are binding, and authorities cannot unilaterally increase financial obligations. Buyers should carefully review every clause of their lease agreements and seek legal advice if necessary.

Conclusion

For prospective and current leasehold property owners in Noida, this verdict provides clarity and protection. It reaffirms that one-time lease payments, once agreed, cannot be arbitrarily increased, offering much-needed certainty in property investments.