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Major Boost for MHADA redevelopment

Friday, July 14, 2017

The Government of Maharashtra, Urban Development Department on July 3 2017 notified its long awaited amendment in respect of redevelopment of MHADA layouts. Ramesh S. Prabhu goes into the details

The redevelopment in Mumbai started with the incentive FSI  of 2.5 given to  56 EWS/LIG and MIG MHADA Colonies by amending Rule No. 33(5) of  Mumbai Development Control Rules, 1991.  Each tenants were assured of minimum 300 Sq. Feet carpet as against earlier area of 180 sq. Feet to 220 Sq. Feet. The increase in housing prices post 2005 further gave boost for the MHADA Redevelopment and the tenants of MHADA Colony started receiving the offers for better corpus and few developers also offered  additional area over and above 300 Sq. Feet to the existing tenants. The premium payable for the area available for sale was given to the builder at the premium of 40% of Ready recknor rate.  Compared to the selling price, the premium amount was very much negligible. Therefore, there was huge rush from both the developer and the societies of MHADA to go for redevelopment and execute the agreement very quickly.

The setback
Considering the profit to be earned by the developer at the cost of the MHADA land and also the great demand for affordable housing, the government took a decision  in September, 2010, to claim housing stock  from the developer of MHADA colonies instead of the charging the  premium.  The economic working and the feasibility of the MHADA development took a hit and all the redevelopment project came to a complete standstill since Sept 2010. Many societies had executed the development agreement considering the  premium payment for additional FSI. Many societies had demolished the  building waiting for the approval. The redevelopment of MHADA completely stopped.

The societies started various campaign to reintroduce the premium policy at least for smaller plots of MHADA. And, this month, the new MHADA policy of redevelopment has been notified, which has been welcomed by the housing societies and developers. This move will benefit over two lakh MHADA residents and developers as well.

(Ramesh S. Prabhu is Chairman, Maharashtra Societies Welfare Association)

Benefits of the new scheme

  1. Minimum assured area of 508 sq. Feet carpet which may be converted into two bedroom flats
  2. Corpus as may be mutually decided between the developer and the society.
  3. The arrangements were mostly made by the societies pre Sept 2010 as per the rate prevailing at that time and now also the rate of the houses even in a dull market is much above the rate of 2010. Therefore, the projects becomes viable.
  4. With the introduction of RERA and transparency in the real estate project execution further helps the societies to proceed with redevelopment.
  5. The societies now will be able to issue fresh tenders and select the developer as many of the old developers could not compete the project due to various reasons.

Following are the main features of new MHADA redevelopment GR

As per new policy, in case of plots having area upto 4000, FSI upto 3.00 shall be given by collecting the premium for the FSI to be used by the developer for sale without insisting MHADA’s share in form of built-up area.

Further for the plots having area of 4000 or above,  additional 1 FSI shall be granted to the developer making the total FSI of 4.  Upto 3 FSI premium shall be charged and additional 1 FSI  built up area shall be shared with MHADA at the construction cost.

The  front on roads should have width of 18.00 mtr. or more to get the benefit of additional FSI of 3 by paying premium and  additional 1 FSI in area sharing with MHADA.

The existing tenants will be entitled for 35 Sq. Meters of carpet area of flat plus fungible FSI of 35% making the total minimum area of 508 Sq. Feet Carpet area.

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