Maharashtra to Tweak Housing Project Norms

The Bharatiya Janata Party (BJP)-led Maharashtra government plans to tweak the revenue-sharing formula to make it more builder-friendly in redeveloping more than 100 housing colonies in Mumbai.

The government is altering a policy set by the previous government, which made it mandatory for developers to give away some of the redeveloped units to the Maharashtra Housing and Area Development Authority (Mhada).

According to the government led by chief minister Devendra Fadnavis, developers will now only need to pay a certain amount of money to Mhada they will not need to return housing units.

Mumbai has nearly 104 housing colonies developed by Mhada, built between the 1960s and the mid-1980s, which occupy 1,560 hectares (ha) of prime real estate. Many of these have become unfit for habitation and have been declared dangerous to live in by the Municipal Corporation of Greater Mumbai (MCGM).

So far, Mhada has received proposals for the redevelopment of 60 housing colonies, out of which it has approved 12. However, work has not started on any of them yet and people continue to live in these colonies.

"Redevelopment is critical to a city like Mumbai. The new government is taking a lot of steps in adding momentum by increasing FSI (floor space index) or changing redevelopment guidelines in a balanced manner so that more developers are incentivized to take these projects up," said Om Ahuja, chief executive, residential services, Jones Lang La Salle, a property advisory.

In 2008, Mhada came out with a policy for redevelopment of housing colonies, as part of which a builder would get an extra, or incentive, FSI, which was capped at 2.5. This incentive FSI was offered at a price and builders?had to either pay Mhada a premium equivalent to 40% of the ready reckoner price or share 67% of the apartments they built using the incentive FSI.

FSI indicates the basic permissible construction on a plot of land. A ready reckoner is a document published by the state government at the beginning of every calendar year listing property rates across various areas used for charging stamp duty on property transactions.

Subsequently, in 2010, the government made it mandatory for builders to share housing stock with Mhada, even though in 2013 it altered the formula to make it easier for builders.

Still, most builders found this option unviable and, as a result, a number of redevelopment projects failed to take off.

On Wednesday, 21 January, Maharashtra's housing minister Prakash Mehta indicated the government wants to reverse the previous government's decision.

"We will like to adopt a flexible approach on this issue and use any revenue sharing formula which makes redevelopment projects get going," said Mehta.

Developers don't want to give up built-up area because then the project becomes unviable, said Lalit Kumar Jain, chairman of the Confederation of Real Estate Developers' Association of India (Credai).

"...revenue-sharing is the only viable option, and it's good that the government is looking at this arrangement again," said Jain.

Simpreet Singh, housing right activist and convener of Ghar Bachao Andolan, opposed the new government's stance.

"The changes proposed by housing minister are in line with the economic philosophy of BJP governments at state and centre, which are more interested in serving interests of big businesses rather than ensuring welfare of common man," he said.

Ghar Bacho Andolan is a non-governmental organization which works for the housing rights of the economically weaker sections in urban areas.

Vimal Shah, managing director, Hubtown Ltd, said, "Just like slum redevelopment projects, Mhada housing redevelopment has its own set of challenges."

There are several stakeholders in such projects and there needs to be a clear-cut policy in terms of revenue-sharing arrangement so that every party benefits from them, he said.