A Brief Overview of Pagdi System in India | Homes247.in

Date: 26-May,2022Last Updated: 26-September,2022
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You might've heard about Pagdi or Pagdi-kirayedar

but ever wondered what it was exactly?

Pagdi System is a popular and long-standing form of housing in India. A housing system is a form of rental practice that is still prevalent in some parts of the country, especially in Mumbai. The system got a lot of attention during the pre-independence era under British rule.

now let's explore in detail,

What is Pagdi System?

Pagdi System is a unique form of tenancy where the tenant pays the rental amount in full and had got some ownership rights as in they can sublet their homes. There were no official rental or lease contracts, and the tenant used to get rent receipts every month.

There was also no increase in rent whatsoever. This system was first introduced to bypass paying taxes to British Raj. But soon, it evolved into the form of housing that we see today.

Pagdi System was very popular till 1999 when the Rent Control Act was brought into existence. Even now, there are over seven lakh Pagdi homes in Mumbai. Kolkata and Delhi are the other major cities where the Pagdi systems are still active.

The Legality of the Pagdi System

Section 56 of Rent Control Act of 1999 made the Pagdi System legal. According to which the owner of the land can provide a part/type/form of the ownership of the particular property in question to the tenant for a sum/deposit of money. However, the tenant, as mentioned before, will only have authority over the property or house, not the land as such, according to the Pagdi system act.

Hence he can sublet the property to someone else, wherein a half part of the same amount which the original tenant receives as rent must be given to the owner. Under the Pagdi system sale of property, the tenant will not be able to sell the property. The tenant will not be able to construct anything or remove any part of the property.

The Government is still planning to bring the Pagdi system under the RERA ( Real Estate Regulatory Authority) and thus bring more protection to the tenants just as the home buyers.

Model Tenancy Act

Model Tenancy Act is an initiative by the Government to regularize the rental sector in India.

The Government also strives to bring the benefits of the same to the Pagdi system in India as well. This will help in protecting the tenants as well as the owners from disagreements and troubles in the rental sector when the chawls are set to be redeveloped into flats in the future; as per the upcoming RERA & MTA, the current tenants will also get the benefits for the same.

These laws are all aimed at revising the age old traditional Pagdi system. This will also help in the re-development of the dilapidated old chawls. This will also reduce the numerous chawl-related accidents.

So, guys, this was a brief overview of the Pagdi system in India.

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