Gujarat Mulling New Law To Streamline Transfer-Fee Paid To Cooperative Housing Societies

The government move will address a long-pending demand of property buyers who have often complained that housing co-operative societies levy a hefty charge on them during the purchase of a property.

Currently, there is no definite structure to calculate a standard transfer fee. However, through bylaw no. 38 of the Gujarat Cooperative Societies Act, 1961, the state government in August 2001 capped the maximum transfer fee at Rs 25,000.

But most cooperative societies in urban centres – such as Ahmedabad, Surat, Rajkot, Vadodara, Gandhinagar, Junagadh, Jamnagar, and Bhavnagar – have continued to charge between Rs 50,000 and Rs 1,50,000. These societies do this by collecting the transfer fee under vague item heads such as “development fee”.

In several cases, irked property buyers have refused to pay the transfer fee, resulting in disputes between the buyers and the cooperative societies. Gujarat government sources said the government is bringing the legislation to curb these clashes.

The bill will include mainly two things. The first will deal with the issue of high transfer fees. The bill will provide a clear structure to calculate the transfer fee. It has been decided that a certain percentage of the property sale price (sale deed amount) will be fixed as transfer fee, the sources said. This will mean those buying affordable properties will have to pay a lower transfer fee and those buying high-end properties will have to pay a relatively higher transfer fee.

Once this bill is passed, the discretion of housing cooperative societies will end.

The bill is expected to address another contentious issue. It is likely to set a deadline of three months for buyers to pay the transfer fee. If the transfer fee is not paid within this period, sources said, a penalty will be charged from the erring buyers.

According to the state’s cooperation department, a total of 29,363 housing societies are operating in Gujarat. These societies are governed by the Gujarat Co-operative Societies Act, 1961 and the Gujarat Co-operative Society Rules, 1965. After Gujarat introduced the Real Estate Regulatory Authority (RERA) in 2016, it became mandatory to form a housing co-operative service society in the state.