Maharashtra Deputy Chief Minister Eknath Shinde has announced a new regulatory framework to redevelop Mumbai’s pagdi buildings, calling it a “historic decision” that could eventually phase out the tenancy model from the city. Speaking in the legislative assembly, Shinde said the move would accelerate redevelopment of ageing structures, prevent building collapses and reduce loss of life and property.

The pagdi system is a traditional rental arrangement in which tenants pay an upfront amount, enjoy near-lifelong occupancy at nominal rents, and have rights to sublet or transfer their interest. Rooted in pre-Independence practices, the model remains legally recognised but has long been criticised for discouraging maintenance, obstructing redevelopment and fostering informal transactions.

According to Shinde, more than 19,000 rent-controlled buildings in Mumbai operate under the pagdi structure, many of them constructed before 1960. While some have been redeveloped or have deteriorated or collapsed over time, over 13,000 buildings are still awaiting redevelopment. He said progress has been slow due to legal disputes and structural complexities, underscoring the need for a balanced framework that protects both tenants’ and landlords’ rights.

Under the proposed rules, tenants will receive Floor Space Index (FSI) equivalent to the area they currently occupy, while landlords will be entitled to FSI in proportion to their land ownership. For tenants from economically weaker sections and low-income groups, the government will ensure that the full reconstruction cost of their existing homes is covered, as FSI incentives alone are often insufficient. A separate set of rules will be drafted to support this category.

If planning restrictions such as height limits prevent full utilisation of the available FSI, the remaining balance will be granted as Transferable Development Rights. Existing redevelopment options under regulations such as 33(7) and 33(9) will continue, with the new framework offering an additional route for buildings that have not benefited so far.

Shinde noted that nearly 28,000 disputes between tenants and landlords are currently pending in small-cause courts, delaying redevelopment for decades. With the approval of the high court, the state plans to establish additional fast-track courts to resolve these cases within three years. He said the initiative would enable lakhs of Mumbai residents living in pagdi buildings to move into safer, ownership-based homes without injustice to either party.

Experts say a dedicated framework has become essential as existing rent control laws no longer reflect the realities of Mumbai’s ageing housing stock. Extremely low rents under the pagdi system have left landlords with little incentive or capacity to maintain buildings, leading to widespread deterioration. At the same time, disagreements over compensation and rehabilitation have stalled redevelopment in several neighbourhoods.

The reform is expected to bring greater clarity, transparency and efficiency, potentially encouraging landlords and developers to support redevelopment while offering tenants more secure rights in rebuilt properties. Clearer processes could also reduce legal risks, helping speed up redevelopment across Mumbai’s old and congested areas where safety concerns are growing.