Bengaluru, February 18, 2026 – In a significant policy shift aimed at addressing long-standing grievances from plot owners, the Bangalore Development Authority (BDA) has overhauled its penalty system for undeveloped or vacant allotted sites. The authority has replaced the previously uniform 10% levy—based on the prevailing guidance value—with a more equitable graded penalty structure ranging from 2.5% to 10%, determined by the size of the plot.

This reform follows widespread objections to the flat 10% penalty introduced in September 2024, which many allottees found disproportionately burdensome, especially for smaller plots amid rising property values.

Background of the Penalty System

Under BDA’s lease-cum-sale agreements, allottees are typically required to commence construction within a stipulated period—often five years—after site allocation. Failure to develop the plot has long been viewed as contributing to land banking, urban stagnation, and issues like vacant sites becoming dumping grounds or sources of civic problems.

Previously, penalties were fixed amounts in earlier years, but shifted to a flat 10% of the current guidance value in 2024. With Bengaluru’s real estate boom driving up guidance values, this resulted in steep fines—sometimes running into lakhs or even crores—for non-construction, leading to low compliance and public backlash.

Key Details of the Revised Graded Structure

The new slab-based approach, approved following discussions at the BDA’s governing body meeting, ties the penalty percentage directly to plot dimensions for greater fairness, particularly benefiting smaller allottees such as middle-class families or first-time buyers.

The revised penalty rates are as follows:

• Plots up to 600 sq ft (typically 20×30 ft) – 2.5% of the prevailing guidance value
• Plots between 601 and 1,200 sq ft (typically 30×40 ft) – 5%
• Plots between 1,201 and 2,400 sq ft (typically 40×60 ft) – 7.5%
• Plots of 2,401 sq ft and above (larger sites, e.g., 50×80 ft or more) – 10% (unchanged from the previous flat rate for bigger plots)

The penalty is calculated on the guidance value applicable at the relevant time, and allottees must clear dues within a specified period (often 90 days), after which interest may apply (such as SBI’s MCLR plus 2%).

Additional Provisions and Options for Allottees

To provide further flexibility:

• Allottees unwilling or unable to pay the penalty can opt to surrender the site back to the BDA, with a deduction of 12.5% from the amount already paid, and the balance refunded.
• Those who have already paid the earlier 10% penalty under the old system will not receive refunds, and the new rates do not apply retrospectively to them.
• The reform aims to encourage genuine construction while discouraging speculative holding, potentially impacting thousands of the over 68,000 vacant sites across various BDA layouts in the city.

Official Stance and Objectives

BDA officials, including Commissioner P Manivannan and Chairperson NA Haris, have described the change as a board-level decision responsive to public feedback. The graded system seeks to strike a balance: lighter burden on smaller plots to promote development among modest owners, while maintaining stricter measures on larger sites often associated with investment-oriented land banking.

This move is expected to improve compliance, accelerate planned urban development in Bengaluru’s layouts, and reduce the number of long-vacant plots that hinder infrastructure progress.

Allottees affected by the policy are advised to check official BDA notifications or contact the authority for personalized details on their sites. The reform marks a step toward more proportional enforcement in Bengaluru’s evolving real estate regulatory landscape.

  Bangalore Development Authority, BDA Plots, Bengaluru real estate, Penalty System