Developers To Be Directed To Reserve 20% Area For Affordable Housing

The Maharashtra state government is all set to make it mandatory for the developers to reserve 20% of the plot area for affordable housing. This will apply for a built area of more than 2,000 sq.m. The Maharashtra chief minister is yet to give a final nod, but there may be few changes in the notification pertaining to minimum plot area and incentive FSI under the scheme.

What does the notification say

According to the notification, builders who plan to develop a layout of an area more than 2,000 sq.m must set aside at least 20% of the layout area for low-income groups i.e. setting aside at least 320-540 sq.ft of layout area for constructing flats for families belonging to the low income group. The developer must then hand the area over to the state housing board (MHADA) at the construction cost. The board will then develop the plot and sell it to the low income families based on a lottery system.

The government is very clear about purchasing the reserved plot area from the developer at the cost of construction and not the market price. The developer can hand over the area either in the form of empty plot or built flats.

Potential roadblocks

The developers had raised objections for this notification earlier. According to them, the notification in its current form is not a commercially feasible option. An area of 2,000 sq.m is too small an area to combine both low-income as well as luxury apartment projects. According to the, the low-income families will also not be able to pay the high maintenance costs associated with the luxury apartments.

Developers also contend that in other states, the cap is 5% on reservation though the land values are not higher than that of Mumbai or Maharashtra. The 20% reservation in Maharashtra doesn’t make logical sense. The Urban development department had earlier cleared the notification last year. However, the high court said that the notification had to be reworked on its technical aspects.

The final notification is expected to see some positive changes in terms of the plot area and FSI. The government is expected to increase the plot size from 2,000 sq.m to 3,000 sq.m as well as the incentive floor space index.