Redevelopment of Housing Societies

Redevelopment of properties of existing Co-operative Housing Societies has been a subject of great interest in recent years, both to the Societies and to the Builders. With the real estate prices touching a new high, residents in old buildings are now discovering that they have an opportunity to unlock immense value from their property by offering it to a Builder/Developer for redevelopment.

Redevelopment has become quite popular in Co-operative Housing Societies since it is a most practical, economical and long term solution in a scenario where old structures are proving uneconomical or obsolete; whereas for the Builder it is a cost effective way to construct residential/commercial premises by utilizing the unused potential i.e. the Floor Space Index — Transferable Development Rights with gradual capital investment, in times of heavy land prices and in a situation of unavailability of land in good locations.

However, there are many factors/questions that arise during the ongoing process of redevelopment and they are to be taken care of diligently while opting for Redevelopment. These factors by and large are the prompt implementation of Govt. Guidelines, Delay in possession of flats in redevelopment of Housing Society, Delivery of flats in time, Bumps, Bash and Bouncers from Builders, Busting of redevelopment projects of Housing Societies, Corrupt Members of Managing Committee, Faults, Facts and Fundamentals about redevelopment, Drafting of Development Agreement, Responsibility of Members of the Managing Committee in redevelopment, Letter of Consent to be furnished by a Member of the Housing Society, Corruption in redevelopment , Redevelopment and sand shortage, Recovery of dues from defaulting members, Selection of a good Builder, Unauthorized constructions by Builders and many more.

Click Here for all the resources you may need for redevelopment including Judgements, Frauds and Scams, Government Policies / Notifications and much more. One of the best resources available online, with latest updates, built by Dilip Shah, Senior Counsel and Analyst for Redevelopment of Housing Societies.

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Fungible FSI under Mumbai DC Regulations

What is Fungible FSI and how is it calculated ? Click Here for a quick overview and analysis including benefits for the existing members of the Society, by Dilip Shah who is a Senior Counsel and Analyst for Redevelopment of Housing Societies.

Vinod Sampat on Redevelopment Projects, Landmark Judgements and Common Mistakes

Advocate and property expert Mr Vinod C Sampat while speaking at a seminar organised by Moneylife Foundation in Mumbai on 12 November 2011.

Tips on selecting builder for redevelopment projects. He insisted that the process should be transparent, and advised that housing society members should have legal and technical consultants to interact with the builder. Also, it is important to check the builder’s credentials and financial conditions, he said.

Landmark judgments related to cooperative societies and explained new rules which have been framed and laws which have been struck down. He also talked about several laws by virtue of which officers concerned can be made accountable for delays and even be penalized.

He said not many people are familiar with the workings of the cooperative housing societies, and are left confused while dealing with a variety of civic and legal compliances. He pointed out that most cooperative housing society members do not check the several financial aspects related to cooperative housing societies; and end up paying extra charges for several things, and at times, defaulting on necessary payments.

 

Redevelopment of MHADA Colonies

Redevelopment of old dilapidated buildings belonging to various societies in various MHADA layouts

Ref: Government notification vide no. TPB/4308/74/CR-11/2008/110-11 MHADA decided to Dtd. 6/12/2008, amending the clause 33(5) of DCR.1991.

Currently majority of the real estate housing second projects are the projects involving what is popularly known as “redevelopment” projects which are carried out by demolishing old structures and reconstructing new ones by availing incentives FSI/TDR benefits as available under provisions of various DC regulations.

There are various options available for redevelopment of old and dilapidated buildings in Mumbai city and suburban areas under various provisions of DC regulations. The subject of redevelopment has assumed great significance because in Mumbai, majority of buildings owned by the co-operative housing societies are quite old and in a dilapidated condition and thus inhabitable. Amongst these buildings there are MHADA’s 56 colonies in Mumbai compromise 3701 buildings having 1,11,659 tenements. Out of these 3701 buildings some of buildings i.e. only 10% have already undertaken redevelopment through developers and majority of buildings are in the process of going in for redevelopment.

To augment the process of redevelopment in MHADA layouts, Govt. modified provisions of DC regulation no 33(5) in Dec’2009 thereby enhancing the available FSI to 2.5 for all MHADA layouts vide Govt. GR no. TPB/4308/74/CR-11/2008/UD-11 Dtd. 6/12/2008 with certain terms and conditions. Two options were made available to avail of the benefits of additional FSI.

1. One involved payment of premium to MHADA in lieu of the additional built-up area and

2. The second option involved sharing of balance built-up area after deducting the existing built-up area along with incentive from total built-up area in the ratio 2:1 in suburb and in city for Mumbai.

For the first one and a half year MHADA decided to allow the societies in the suburbs to choose the option and approved several schemes of redevelopment. However on or about 19th Sept. 2010 MHADA decided to opt for the second option of sharing of built up area in the ratio 2:1.

MHADA decided to go in for second option apparently to increase its housing stock. Unfortunately the option of sharing of built up area is not an option which is commercially viable for the society’s and developers considering high cost of construction, development, approvals, interest as also requirement of tenants in terms of higher carpet area for which the whole exercise of amending the clause 33 (5) have been done in the past.

We appreciate that Govt. /MHADA aims to overcome its shortage of housing stock and thus has changed its policy. Government has brought this policy to create affordable housing stock. But it has been observed and checked in MHADA office that no proposals are being put up by societies and developers since September 2010 proposals under this changed policy are not at all commercial viable due to the reasons stated above. It is evident that this policy is not workable and has resulted in huge losses of revenue to MHADA.

Moreover the aim with which the policy is being implemented is not serving the purpose as no society is willing to opt for the sharing formula being commercially unviable. Therefore, the redevelopment projects in all MHADA layouts have come to a grinding halt after this policy is introduced bythe government.

In view of the above, the Government/MHADA is facing following losses on account of not workable and unfunctionable policy introduced by them.
1. They put the lakhs of lives of tenants in danger condition as most of MHADA buildings are in dilapidated condition as declared by the Corporation,

2. They have also lost the opportunity to generate about 1 lakh housing stock as Developers /Builders were in a position to construct and sale houses in the market.

3. They have lost revenue of Rs. about 1000/- crores towards selling of additional FSI on premium basis to the developers as per D.C. Regulation 33(5)2-C-(ii). The detail calculation of this amount is as follows :-

 

4. There is no time bound’ programme for redevelopment of said buildings. So that the progress of redevelopment projects are very slow. As such it is affecting on revenue for the government as well as development works.

In spite of this failure on their part, there is no check on department of V.P. of MHADA, Housing Secretary and Housing Minister of Maharashtra Government. Considering the facts, it is required to change this stand of 2:1 and adopt premium basis policy as per provisions of DC regulation 33 (5)2 -c-(ii) for redevelopment of M HADA housing colonies and generate finance for creating more affordable housing stock as required.

The task of taking up & completing redevelopment projects for old and dilapidated buildings and giving houses to the poor and needy people of existing MHADA layouts and to generate revenue for the MHADA is not difficult provided the practicable and workable policies are adopted by MHADA/Govt.

It is required to clear the deadlock in redevelopment of MHADA buildings in the interest of redevelopment of said properties.

MSWA’s Housing Societies Review 28 April 2012 

Amended DCR doesn’t benefit suburbs, says MSWA

Amended DCR doesn’t benefit suburbs, says MSWA

The amended development control rules had no significant benefit of FSI or open space concessions extepded to Mumbai suburbs.

The Maharashtra Societies Welfare Association (MSWA) and suburban resident welfare associations of Mumbai have sought the withdrawal of new amended Development Control Rules (DCR). They said the changed rules had no significant benefit of FSI (floor space index) or open space concessions extended to the island city for the suburbs.
The DCR amendment came in January this year. The civic body hopes to garner approximately Rs 1,000 crore in premium collection. The square foot rate in of built-up space in the city varies from Rs 72,000 to Rs 20,000, while in suburbs it is between Rs 42,000 and Rs 7,500.

Under the amended regulations, areas such as terraces and swimming pools or individual apartment balconies and ornamental projections that were not part of the FSI would be included in FSI to prevent manipulations by developers. These areas come under a concept of compensatory FSI, in lieu of a premium levied on developers. The areas under.compensatory FSI called ‘fungible FSI` should not be more than 35 per cent of the total area of the apartment. Also, no premium will be charged for fungible FSI while redeveloping dilapidated buildings and in suburbs; the fungible FSI on the FSI already consumed in the existing buildings will be available free of premium. Some other changes include an option of 25 per cent more parking over the DCR limit without premium, which is also exempted in the FSI calculation.

The Maharashtra Chamber of Housing Industry had welcomed the amendments, and said only 20 per cent reservation for affordable housing in more than 2000 square metres plot redevelopment was detrimental to them. According to Mr Boman R Irani, Chairman, Rustomjee Group, there is no advantage for a developer in terms of the amendments, but it had done away with the discretionary power of the authorities, which makes sure that one and all know how much they can build on a plot of land. –

 

THE RATONALE
Suburbs are qualified for one FSI plus loading by way of transfer of developmene rights of one FSI, which they should purchase (total two). This is in addition to fungible FSI and a premium FSI of 0.35 (Grand total of 2.7). BAI has questioned the rationale behind the amendments.

While developers in the island city limit get 1.33 FSI, there are no open plots, and they benefit by the incentives given for redevelopment. There are more than 16,000 old buildings which are eligible for three FSI for redevelopment individually, and four, if developed as a cluster (if projects are amalgamated as one), they contend. Most of the old buildings are cessed tenements. With rents frozen for decades, owners of these buildings have either deserted them or are unable to maintain them. The government brought in a cess collection for these buildings from tenants for maintaining them in the seventies.

BAI said the existing provisions for the city allow three to four FSI in addition to compensatory FSI for the rehabilitation portion. Suburbs get one FSI in addition to TDR (transfer of development right) of one, and compensatory FSI of 35 per cent (calculated on one FSI). But these were capped by the open space regulations.

 

CITY AND SUBURBS

On open space requirement, in suburbs, it is six to nine metres on all sides of the building. For the city, it is six, and concessions can be extended to bring it down to 1.5 metres depending on the plot size.

Further, open space for suburbs is linked with the height of the building and individual sanction from the Brihanmurrbai Municipal Corporation Commissioner.

Mr Anand Gupta of the Builders Association of India said the open space requirement was primarily for fire safety and questioned how it could be relaxed for the city and retained for the suburbs. It was impossible to comply with the open space requirements in suburbs, especially in smaller plots.
Moreover, the Municipal Corporation has defined a special category of plots of less than 600 square metres in the city and made them eligible for reduced open space norms, he charged. More importantly, there were very few dilapidated tenanted buildings in the suburbs, and hence
redevelopment was by the residents themselves. So, there was no justice in denying suburbs the concessions doled out to old buildings in city. Moreover, the plot size in suburbs was far smaller with buildings of two to seven storeys.
Mr Ramesh Prabhu, Chairman of the Maharashtra Society Welfare Association, said a majority of the plots in the town planning schemes under WPD (juhu Vile Pane Development Scheme) were less than 600 square metres. These don’t qualify for any benefits under the open space regulation or rehabilitation component of the amended DCR rules as their counterparts in the city do.

MSWA’s Housing Society Review – 20 April 2012

Deemed Conveyance


About Conveyance Its Advantages And Disadvantages

Meaning of Conveyance:

Conveyance Deed is a document executed to transfer the title of land and building in favour of Society.

Importance and provision of law on Conveyance:

As per the Housing Society bye-laws, the main objective of formation of the Society is to obtain the Conveyance; and if Conveyance is not given by the Builder within four months from the date of registration of the Society, a case can be filed against the Builder to obtain the Conveyance. As per Section 13 of Maharashtra Ownership Flats Act, 1963, failure to give Conveyance is an offence and the Builder can be imprisoned upto 3 years or fined or both.

Click Here for the full story including Checklist, Procedure and FAQs

These sweeping changes by IRDA will protect you

Right from claim settlement to getting a cashless mediclaim, policyholders have to face a lot of problems in getting their dues under a health policy. Moreover, there are stringent deadlines to be met by the policyholders in filing their medical claims; which if they (insured) fail to meet, claims are declined by the insurers. Also, until now the insurers are not mandated to provide the reason for denial of claims to the insured.

Citing such problems faced by the insured or policyholders, the insurance regulator – Insurance Regulatory and Development Authority (IRDA) has laid out a slew of changes in the insurance industry under its draft guidelines.

Let us delve deeper into the sweeping changes brought about by the IRDA

Click Here for the full article