Article 370 and 35A : Removal of ‘Special Status’ for Jammu and Kashmir impact the Real Estate


We examine the impact of the revocation of Jammu and Kashmir’s special status under Article 370 and the provisions of Article 35A, on women’s property rights, succession rights of children and avenues for private investment and jobs, followed by housing demand
The government, on August 5, 2019, revoked the ‘special status’ granted to the state of Jammu and Kashmir, under Article 370 of the Indian Constitution and also repealed Article 35A. The government has also proposed to split the state into two union territories of J&K and Ladakh and the same has already been cleared by the Rajya Sabha and the Lok Sabha and now awaits the president’s assent. It is an established fact that housing demand follows job opportunities and this has been visible in the tier-1 cities of India. Private investment is a huge catalyst, as it triggers demographic shifts, leading to people migrating for jobs and settlement. The government’s moves, hence, could have far-reaching implications on the property market in the region.

Employment prospects in Jammu and Kashmir
Till now, Jammu and Kashmir was a closed zone, for private investments. Even the tourism industry in the state could not fully realise its potential, due to restrictions on trade and buying property. Banks were hesitant to extend loans, because in case of defaults, they could not dispose of the property to recover losses under the SARFAESI Act. This prevented manufacturing and IT companies from setting up operations.

With an investor’s summit planned in October 2019, the authorities are keen to invite and attract investments in the field of agro-processing, hospitality, tourism, horticulture, healthcare, education, pharma and many other industries. Nevertheless, after the revocation of the special status, the authorities will need to chalk out rules, to bring in momentum in employment and investments. The availability of jobs, could attract skilled workforce from within Jammu and Kashmir, as well as other states.


Property purchases in J&K for non-residents
Until now, only permanent residents of Jammu and Kashmir enjoyed the right to acquire property in the state. The revocation of the special status, could mean that non-residents will also acquiring this right, thereby, infusing momentum in the property market. Land rates in the two union territories may, hence, rise. Owing to its scenic background, Jammu and Kashmir could attract wealthy investors. However, it might be too early to make an investment, given that it will take the authorities a few months to clarify the rules and restrictions pertaining to local lands. The distinct demographics of the two territories, also make it important to study the market, before making an investment therein.


Applicability of RERA in Jammu and Kashmir
While J&K’s real estate rules came into force in December 2018, the central Real Estate (Regulation and Development) Act (RERA) rules that got its shape in May 2016 and was applicable for the rest of the country, did not apply to the state, so far. Going ahead, the two union territories may be equally bound by the central rules, although states are allowed to draft and implement their own specific rules.

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