Maha govt offers double bonuses to builders for redevelopment projects

13 Jul 2021 CW Team

A new Maharashtra urban development department notice has offered real estate builders double the existing construction bonuses for redeveloping old and dilapidated buildings.

In what property market sources called a significant bonanza, the builders would now be entitled to 75% to 100% more incentive to sell in the open market than the current existing 50% to 70%.

Occupants living in such buildings will get a meagre 8% extra space in the new, redeveloped tower rather than the 5% at present.

According to the sources, the fresh rules also allow clubbing of schemes 10km apart, which would lead to high-value areas getting developed and the low-value regions being neglected.

A source told the media that while builders get a bonanza virtually doubling their profits, tenants are only entitled to 5% to 8% extra area, subject to the specified upper limit. Those who have flats larger than 750, which is the upper limit, will not be entitled to more area free.

Haresh Mehta, South Mumbai property redeveloper, told the media that the redevelopment projects had become unviable for builders in south Mumbai due to the high premiums levied by the BMC. He also said that the incentive to builders was only 50% in the city and that consequently, such schemes were not viable. With the change in the incentive structure, they will be more feasible now.

Vilas Nagalkar, an Architect, told the media that most such schemes were not economically feasible earlier due to excessive statutory charges earlier. Still, these modified regulations will accelerate those stalled works.

The incentive for the builders is increased to 75%, 78% and 80% on a single plot, 85%, 88% and 99% on two to six plots, and 90% to 100% on more than six plots taken up for redevelopment under the new notification.

The industry experts said the virtual doubling of Floor Space Index (FSI), the ratio which defines how much can be constructed on a plot, will significantly improve the profits of the redeveloper.

Image Source

Also read: Mangalore Urban Development Authority cuts betterment fee by 80%

Also read: Chandigarh Housing Board gets Rs 17.6 cr from residential auction

A new Maharashtra urban development department notice has offered real estate builders double the existing construction bonuses for redeveloping old and dilapidated buildings. In what property market sources called a significant bonanza, the builders would now be entitled to 75% to 100% more incentive to sell in the open market than the current existing 50% to 70%. Occupants living in such buildings will get a meagre 8% extra space in the new, redeveloped tower rather than the 5% at present. According to the sources, the fresh rules also allow clubbing of schemes 10km apart, which would lead to high-value areas getting developed and the low-value regions being neglected. A source told the media that while builders get a bonanza virtually doubling their profits, tenants are only entitled to 5% to 8% extra area, subject to the specified upper limit. Those who have flats larger than 750, which is the upper limit, will not be entitled to more area free. Haresh Mehta, South Mumbai property redeveloper, told the media that the redevelopment projects had become unviable for builders in south Mumbai due to the high premiums levied by the BMC. He also said that the incentive to builders was only 50% in the city and that consequently, such schemes were not viable. With the change in the incentive structure, they will be more feasible now. Vilas Nagalkar, an Architect, told the media that most such schemes were not economically feasible earlier due to excessive statutory charges earlier. Still, these modified regulations will accelerate those stalled works. The incentive for the builders is increased to 75%, 78% and 80% on a single plot, 85%, 88% and 99% on two to six plots, and 90% to 100% on more than six plots taken up for redevelopment under the new notification. The industry experts said the virtual doubling of Floor Space Index (FSI), the ratio which defines how much can be constructed on a plot, will significantly improve the profits of the redeveloper. Image Source Also read: Mangalore Urban Development Authority cuts betterment fee by 80% Also read: Chandigarh Housing Board gets Rs 17.6 cr from residential auction