Summary of this article
Punjab mandates full land ownership for CLU approval.
New rules target stalled projects and buyer protection.
Developers face stricter financial and compliance conditions.
The Punjab Government has made a move to protect homebuyers from project delays and disputes in the real estate sector. By amending the Punjab Apartment and Property Regulation Act, 1995, they have mandated provisions that require developers to hold 100 per cent of the land title before securing Change of Land Use (CLU) permission for any residential colony. This is a departure from the earlier partial ownership model.
Section 5 of the Punjab Apartment and Property Regulation Act, 1995, governs licensing and land conversion for housing projects. Earlier, it required developers to own at least 25 per cent of the project land before proceeding with the CLU, provided they had a registered agreement for the remaining land. Now, under the new requirement, it is necessary that the entire project land be registered in the promoter’s clear title before any conversion approval is granted by the authority. Even separate CLU approvals will be needed for each colony developed by the promoter.
This reform stems from growing concerns over land ownership disputes, which stall housing projects, resulting in financial losses and frustration faced by buyers. According to the older act, developers were allowed to commence projects based on partial land control, only to face later disputes with landowners or even litigation. This outdated approach left buyers with unfinished homes. The amendment makes full title ownership compulsory for developers before proceeding to CLU, to eliminate such uncertainties and hurdles.
Beyond clarifying land title, the amendment tightens financial obligations on developers. Promoters are now under the obligation to seek 100 per cent ownership titles, instead of the previous 25 per cent of the External Development Charges (EDC) within 30 days of receiving the Letter of Intent.
Before, payment of EDC was allowed even before the licence was granted, which often led to delays in starting development works.
In order to secure the payment of the remaining EDC, developers must provide a mortgage deed at 90 per cent of the collector rate from within the area of the project by a competent authority. This guaranteed that development charges are backed by an enforceable security.
Another provision of the amendment is that it ensures that if developers fail to pay the EDC or complete the project, the developer will be barred from obtaining any future approvals until all dues are cleared. This strong measure is aimed at discouraging project abandonment and ensuring developers stay true to their commitment.
The notification came from the Department of Housing and Urban Development on December 5, 2025. This move has made a new step towards regulating real estate projects in Punjab.
