The Bangalore Development Authority (BDA) is preparing to impose a penalty of 10 percent of the site’s prevailing guidance value on allottees who fail to construct houses within three years of receiving sites in BDA layouts. The authority has also decided not to issue sale deeds until construction is completed. Even as land prices in Bengaluru continue to rise sharply, many allottees have failed to build houses within the stipulated timeframe. Some investors purchase sites at subsidised, non-market rates and later attempt to resell them at higher prices, while others keep the plots vacant for years, causing inconvenience to neighbouring residents. Illegal transfers of BDA sites without official approval have also been reported.

To curb these practices, the BDA is set to enforce a strict construction penalty of 10 percent of the current guidance value. Sale deeds will be withheld until the allottees complete construction. However, due to development delays, legal disputes and incomplete infrastructure, the Arkavathi and Nadaprabhu Kempegowda layouts will be exempted from the penalty.

Historically, the BDA—while allotting sites at subsidised rates—had imposed restrictions on transferring properties for ten years under the agreement-cum-sale deed, later reducing the period to five years. Several allottees who received sites for as little as Rs 5,000 in the 1960s and ’70s have left them vacant, and many of these plots now command prices of up to Rs 10 crore.

BDA rules empower the authority to cancel allotments and reclaim sites in case of violations, but court orders have restricted such actions. Courts have directed the BDA to adopt a penalty-based regularisation system instead of repossessing sites.

Until recently, the BDA levied fixed penalties such as Rs 1.5 lakh for 20×30 sites, Rs 2 lakh for 30×40 sites and Rs 4 lakh for 60×40 sites. In 2023, however, the BDA board revised the policy to impose a uniform penalty of 10 percent of the guidance value, irrespective of site dimensions. This new rule came into effect on August 19, 2024, and is now being readied for full enforcement.

With guidance values rising sharply across Bengaluru, penalties could now run into several crores. Officials expect resistance from allottees. For example, a 50×80 site in Jayanagar, bought decades ago for Rs 5,000–Rs 10,000 and earlier regularised with a penalty of around Rs 10,000, is valued at nearly Rs 10 crore today. Under the new penalty rule, the allottee may have to pay Rs 1 crore, prompting concerns about opposition to the policy. The matter is expected to be discussed in the upcoming BDA board meeting.

The BDA has also identified around 50 cases where allottees approached the authority for sale deeds simply to obtain e-khata, despite failing to regularise violations. Further, illegal transfers during the restricted period will be scrutinised. According to BDA sources, unauthorised transfers will attract a 25 percent penalty on the value of the illegal transaction.