What Is the Pagdi System In India?

What Is the Pagdi System In India?

When we hear about the real estate industry, the most common word discussed is the ‘Pagdi’ or ‘Pagdi system’. In India, the Pagdi system is an old, traditional, and unique model of tenancy which exists right from the pre-Independence era. The number of people who are practising this system and living as tenants is comparatively low nowadays, but it still does exist. It involves both the landlord of the property as well as the tenant. In this type of tenancy, the tenant pays only a nominal amount of rent to the landlord compared to the existing market rates.

How can one avail tenancy rights?

As the Maharashtra Rent Control Act, 1999, says that in the event of death of the tenant, the family of the deceased who has been living with the deceased till the time of death shall be the first to be the successor of the tenancy. Whenever there is a demise of the current tenant under the Pagdi system, all the rights are supposed to be transferred to the legal heir(s).

The said successor/family of the deceased will have to provide sufficient and appropriate proof of residency that they were indeed living with the deceased at the unfortunate time of demise. The family member who fulfils this condition shall have precedence over the other eligible family members of the deceased and occupy the rights in question.

How is the pagdi system relevant in today’s time?

In large metropolitan cities like Delhi, Mumbai and Kolkata, the micro-markets still practise the pagdi system. In a city like Mumbai, areas such as Dadar, Mahim Fort, Worli, Peddar Road, etc., have populations living in the premises as per the laws of this system.

Let us have a look at the advantages and disadvantages of the pagdi system.


·         The Pagdi system is formalised by law, and it is governed by the provisions of the Maharashtra Rent Control Act, 1999.

·         It provides a tremendous advantage to the tenants in the form of lower rents as compared to the market rates. People can live in large metro cities such as Delhi and Mumbai at a very nominal cost.

·         Tenants are permitted to be the co-owner of the premises but not of the land.

·         Tenants can act as co-owner of the property and are entitled to subletting and selling rights.

·         When the situation of redevelopment arises, the tenant can be the co-promoter of the said property.


Even though this system may be legalised in the country, it still has several drawbacks, both to the owners and the tenants. These are as follows:

 ·         Since the tenant is only the co-owner of the property, they do not enjoy the ownership rights.

·         Rent being quite low in metro cities, there is no benefit as such to the owners.

·         The cost of maintenance of the property and other recurring expenses may far exceed the lower rental income, and this may demotivate them to oversee and conduct required repairs.

·         At times, tenants may have to shell out money from their own pockets in order to conduct timely renovations.

·         There may be such situations wherein the tenant may be required to take charge and go on with the redevelopment of the property.


For those who are willing to opt for the pagdi system in good metro cities, home loans can help you to fulfil your desire. You can visit the website to check out home loan plans and opt for the one best suitable to your needs and requirements. Home loans plans for this system have easy eligibility, and this relieves the customers to a great extent as they are ever so concerned about the home loan eligibility. Nowadays, the home loan interest rates are working in favour of the home buyers, thereby attracting more people to consider opting for a home loan.

You can also check out the online free home loan EMI calculator, which helps you land at an estimated cost and allows you to place due to emphasis on your budget. So, wait no more, opt for a home loan and fulfil your life-long desire of a dream house!

John Norwood
John Norwood is best known as a technology journalist, currently at Ziddu where he focuses on tech startups, companies, and products.