MUMBAI: A new state urban development department notification offers builders virtually double the existing construction inducements for redeveloping old and dilapidated buildings, mainly in the island city.
In what property market sources called a major bonanza, builders will now be entitled to receive 75% to 100% more incentive area to sell in the open market compared to the existing 50% to 70%.
Tenants living in such buildings will get a meagre 8% extra space in the new, redeveloped tower instead of the 5% at present. An industry source, who claimed the new rules will make many stuck projects viable and lead to their completion, said: “This has essentially been done at the behest of a few builders.”
The new rules also allow clubbing of schemes 10km apart, which sources said would “lead to high-value areas getting developed and low-value areas being neglected”.
“While builders get a bonanza in the form of virtually doubling their profits, tenants are only entitled to 5% to 8% extra area, subject to the specified upper limit. Those having flats larger than 750, which is the upper limit, will not be entitled to more area free,” a source said.
South Mumbai property redeveloper Harresh Mehta justified the new incentives, stating that in south Mumbai redevelopment projects had become unviable for builders due to the high premiums levied by the BMC. “In the city, incentive to builders was only 50%. As a result, such schemes were not viable. With the change in the incentive structure, they will be more viable now,” he said.
Architect Vilas Nagalkar said: “Earlier, due to exorbitant statutory charges, most such schemes were not economically feasible. These modified regulations will accelerate those stalled works.”
Housing activist Chandrashekhar Prabhu said the amendment to the development control rules will give “unjust windfall of double increase in FSI to builders while allowing just 3% extra area for tenants”.
“Those with larger flats have everything to lose and some unscrupulous redevelopers could use the extra money to dishouse the tenants,” he said.
Prabhu, who has been championing the cause of tenants for three decades, said the redevelopment scheme for cessed properties has failed “not because of inadequate FSI and incentives but because tenants do not trust builders. “Most tenants have been evicted during or after redevelopment by builders,” he said.
Under the new notification, the incentive for builders has been increased to 75%, 78% and 80% on a single plot, 85% ,88% and 99% on two to six plots, and 90% to 100% on over six plots taken up for redevelopment.
Industry experts said the virtual doubling of floor space index (FSI), the ratio which defines how much can be built on a plot, will greatly enhance the profits of the redeveloper.
“Infrastructure like roads, gardens, playgrounds, schools, colleges have remained the same, but the density will increase substantially,” they warned.
Two years ago, data compiled by the state housing authority Mhada showed 2,152 redevelopment projects involving cessed properties in the island city were issued no-objection certificates (NOCs) over the years but only 778 of them were completed. Mhada cancelled the NOCs in 46 cases, comprising 111 buildings and 2,064 tenants. Another 51,321 families living in cessed properties are stuck as their redevelopment projects have failed to take off.
Popularly known as 33 (7), the scheme has been plagued by allegations of building violations and bogus and inflated tenants’ lists shown by builders so that they get more FSI to build.