Maharashtra doubles builder bonanza in redevelopment schemes
According to property market sources, builders will now be eligible to get a 75 percent to 100 percent greater incentive to sell on the open market than the previous 50 percent to 70 percent. Tenants in such buildings will receive only a meager 8% extra space in the new, rebuilt tower, rather than the current 5%.
According to the sources, the new guidelines also allow for the bundling of schemes that are 10 kilometers apart, which will “lead to high-value areas being built while low-value ones are neglected.” While builders benefit from a windfall in the form of nearly doubling their earnings, tenants are only entitled to a 5% to 8% increase in space, subject to a cap.
“Those with apartments larger than the upper limit of 750 square feet will not be entitled to more free space,” a source stated.
Haresh Mehta, a redeveloper in south Mumbai, defended the new incentives, claiming that due to the BMC‘s high premiums, redevelopment projects in the area had become unprofitable for builders. “The incentive for builders in the city was only 50%. As a result, such strategies were impossible to implement. They will be more feasible now, thanks to the change in the incentive structure,” he said.
“Previously, most such schemes were not economically feasible due to hefty statutory charges,” said architect Vilas Nagalkar.
The redevelopment project for cessed homes, according to Prabhu, has failed “not because of inadequate FSI and incentives, but because tenants do not trust builders.” “Most tenants have been evicted by builders during or after redevelopment,” he explained.
The incentive for builders has been raised to 75 percent, 78 percent, and 80 percent on a single plot, 85 percent, 88 percent, and 99 percent on two to six plots, and 90 percent to 100 percent on more than six plots taken up for redevelopment, according to the new notification.
According to industry analysts, virtually doubling the floor space index (FSI), the ratio that determines how much may be erected on a plot, will considerably increase the redeveloper’s earnings. “Infrastructure like roads, parks, playgrounds, schools, and colleges have remained the same,” they cautioned, “but the density will significantly increase.”
Data published by the state housing regulator MHADA two years ago showed that 2,152 rehabilitation projects involving cessed buildings in the island city had been granted no-objection certificates (NOCs) throughout the years, but only 778 had been finished.
The programme, also known as 33 (7), has been dogged by charges of building breaches and false and exaggerated tenant lists displayed by builders to obtain higher FSI to construct.
However, undoubtedly, this new Urban Development Department Notification will significantly change Maharashtra’s real estate market.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
