How to convert your residential property to commercial in India?

A detailed guide on procedures you can follow to convert your residential land into a commercial land with proper governmental approval in India.

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residential to commercial property conversion india
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Before you construct any commercial establishment on your residential land, you need to understand that there zoning ordinances which you need to know about in order to ‘convert’ your land use from residential to commercial. Details of such procedures are outlined in detail by the zoning board of the municipality under which your land currently is held. 

If you have an empty plot of land or residential built-up property that you want to convert into a commercial entity, this article is for you.

In this article, we will briefly guide you through the basics of zone changes and procedures you need to follow to convert your land into a commercial entity. We will take Uttar Pradesh land conversion rules into account as an example.

Zones of land:

  • Agricultural
  • Commercial
  • Industrial
  • Residential
  • Recreational
  • Mixed-Use (commercial and/or rented residential)

If you have a free-hold land area, then it is easier to convert your land into a commercial one, however, if your land comes under a housing society, a township or rent agreement, you need to take permission from the house planning society and the municipality before proceeding construction.

This is done as per Section 143 of the U.P. Zamindari Abolition and Land Reforms Act, which authorizes the Assistant Collector/SDM of your area to change the nature of land from agricultural to residential or from residential to commercial and vice versa.

Pre-requisite information you need to know before going commercial:

  • Before you apply for conversion, plan in detail the area’s use, and nature of business/es you want to use the property for.
  • Apply in the municipal office in the prescribed format and pay the conversion fees which is normally charged under the DM Circle Rate currently as per Section 34 of the U.P. Land Revenue Act. 
  • As per the UP Dookan Aur Vanijya Adhishthan Adhiniyam (Uttar Pradesh Shops & Commercial Act), 1962 no production or manufacturing activity can be conducted on the property until a commercial license is obtained. The commercial use of such land has to be completely professional in nature and the landowner has to attest that it should not cause a nuisance to other dwellers of the society under Section 17, 33, 70 and 80 of the Indian Evidence Act, 
  • As per the act, any shop or commercial establishment that wishes to commence commercial operation must apply to the Chief Labour Inspector for a Shop and Establishment Act License within the prescribed time, generally 3 months from the date of inception of the business. 
  • For commercial conversion, generally, land plots facing a 25-meter to 60-meter roads get faster approvals from the municipality for commercial use.
  • Visit http://e-nagarsewaup.gov.in/ulbapps/ and http://e-nagarsewaup.gov.in/onlinepay/ to register your online conversion request. You can also use the eNagarSewa Citizen App on Google Play Store if your city is an Amrut City (http://e-nagarsewaup.gov.in/onlinepay/OnlineUser/amrutCity.action)

Documents Required

The following documents need to be furnished to the local municipality while applying for land conversion in the State of Uttar Pradesh:

  1. Original Mutation Certificate (If your land was mutated under Section 143 of UP Zamindari abolition and Land Reforms Act 1950)
  2. Certified copies of land records or Copy of original land purchase deed
  3. Copies of Layout, Site plan and Building Plan duly signed by an architect
  4. Record of Rights and Tenancy Certificate (RTC) if there are renters/tenants on the land.
  5. Copy of Power of Attorney
  6. Application for mutation with revenue stamp affixed – Application in Form 1A
  7. Original sale deed (or gift partition deed)
  8. Latest paid house tax receipt
  9. Certified copies of Land map (from Tehsil/Taluk Office)
  10. Certified measurement plan of Land Survey (from District Inspector of Land records)
  11. Appointment letter of Architect and Registration Certificate of Architect
  12. NOCs from authorities (as applicable – Grama Panchayat/ Municipal Corporation/Highway authority/ PCB (for industrial))
  13. Certificate from Patwari/ Talati that land in question is not under Acquisition or dispute of any third-party
  14. Sketch map showing the approach road with dimensions of the road
  15. Plot Information with dimensions of all 4 sides attested by a surveyor
  16. Copy of NOC of Pollution Control Board also known as Mulba Certificate
  17. Copy of Detailed Project Report (DPR) with a map of projected commercial use breakup of the land (floor-by-floor and room-by-room)
  18. Certificate for setting up of Industries by Department of Commerce & Industry, Government of India
  19. Any other documents as required by the Collector

Fee Structure

The initial application charge for any land conversion petition shall be a minimum of Rs. 10, irrespective of the quantum and category of land being converted. The applicant charges for completing the Uttar Pradesh Land conversion process is provided in the table.

The conversion fee of land in the Rural Areas (per decimal of land)

Current land use Conversion to activities allied to agriculture Conversion to Homestead (for personal use) Conversion for Group housing, the housing complex by cooperatives or property developers Conversion to industrial and commercial use and activities
Any other land that is not currently in agricultural or other productive use Rs. 10/- Rs.15/- Rs.20/- Rs.30/-
Agricultural land Rs.15/- Rs.20/- Rs.30/- Rs.50/-
Ponds or any water body (if allowed for conversion) Rs.30/- Rs.40/- Rs.60/- Rs.100/-
Industrial and commercial land unused or underused Rs.50/- Rs.75/- Rs.150/- DM Circle Rate applicable

The conversion fee of land in the Municipal Area (per decimal of land)

Current Land Use Conversion to industrial and commercial use and activities
Bastu, Patit, Danga and any other land that are not currently in agricultural or other productive use Rs. 45/-
Agricultural land Rs. 75/-
Ponds or any water body (if allowed for conversion) Rs. 150/-

The conversion fee of land in KMDA Area (per decimal of land)

Current Land Use Conversion to industrial and commercial use and activities
Bastu, Patit, Danga and any other land that are not currently in agricultural or other productive use Rs. 60/-
Agricultural land Rs. 100/-
Ponds or any water body (if allowed for conversion) Rs. 200/-

Time Frame

Uttar Pradesh Land Conversion permission for any purpose is generally granted within 40 days from the date of application if all conditions have been met.

Basic process of Land Zone Conversion

STEP 1:  

The first step towards the change in zoning land to residential to commercial is to take a look at the official zoning map you possess in your property papers and confirm if your land is residential or not. For this, visit the Lucknow Development Authority portal (for Lucknow) at http://www.ldaonline.in/.

STEP 2:
Visit your Jurisdictional Municipal Office and talk to the Sub-Divisional Magistrate requesting permission to allow zoning change.

STEP 3:

Hire a professional surveyor, an architect and an attorney to validate your case if the zoning change hearing is held in a court of law.

STEP 4 (only in case of housing societies and townships):

Visit your housing society’s association meetings and discuss your zoning change case with them. You might face opposition from some members who might disallow the land conversion based upon an increase in noise pollution, traffic influx and heightened human activity due to your commercial entity you plan to set up.

The only way to convince everyone is to offer them perks, building a good rapport and coming to a conclusive solution. Once you have their approval, a no-objection statement (NOC Certificate attested by a magistrate) from all the society members is mandatory in addition to normal approvals.

STEP 5:

After all your paperwork and stamp duties are paid, your zoning request change (if taken into consideration by the Lucknow Development Authority), will be printed in the local newspapers to invite grievance redressal from your neighbors and the general public.

After all, pleas have been heard, the zoning ordinance will be changed or you might be ordered to make revisions in your land-use plan and restructure the land use pattern as per the locals have requested.

How to get the Government’s approval?

Generally, most commercial conversion applications are rejected in residential areas in order to prevent new development from harming existing residences unless they do not cause a significant increase in traffic and do not infringe on the privacy of the neighboring residential establishments.

It is usually quite difficult to rezone a residential property to a commercial one due to various licensing costs and increased property tax calculations for the government. Moreover, a new survey of the land and a different water and electricity connection will also need to be allotted to the landowner. In recent times, many applications have been rejected

Seeking approval from the Government is cumbersome and the process usually requires:

  • Public notice
  • Meeting with zoning board members (LDA)
  • Discussion with the neighborhood association to allow a variance (a permit that allows you to use land in a way that is different from the zoning restrictions).
  • The variance needs to be attested with a NOC while filing your application on the

Final process – Due Diligence By Competent Authority

The sub-divisional officer/ collector to whom the application has been previously submitted will conduct an inquiry on your land in the form of:

  • Cross-check of land information from Tehsil Office on ownership, type, area, and encumbrances if any.
  • Site visit by Circle office to check if the land is vacant, if the existing structures are according to the architect attested plan, no high tension electrical lines run in front of the land, etc.
  • Verification from the Land Acquisition Department to check if the Master plan supplied by you is within Development Control Regulations and is in compliance with all Building Bye-Laws.
  • Consultation with planning and development authority to verify that the land is not situated in a Forest zone, Coastal Regulation Zone (CRZ) or Heritage zone.
  • In case the planning and development authority finds any objections a written report addressed to the Collector/Sub Divisional officer will seek cancellation of your request.

Grant of Approval

Once the local development authority is satisfied that all prescribed conditions have been met with, the Change of Land Use approval will be granted to the landowner subject to the following conditions:

  • The applicant has paid all applicable Change of Land Use charges as per DM Circle Rate.
  • Applicant agrees to abide by all Development Authority Notifications & Bye-Laws.
  • The Mutated Land shall not be used for any other purpose other than commercial.
  • Applicant should commence the construction of the Master plan within 1 year from the date of Mutation Order such as the demarcation of the plot, leveling of land and construction of floors.

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