Do you need a builder to re-develop your home?
With an increase in the real estate prices and the saturation of most of the city areas, there is an increase in the process of re-development of various building structures in India. The existing building structures have been targeted by builders to re-develop them and convert them into new ones.
In order to get more re-development projects, various builders are offering incentives to demolish older buildings and construct them into new edifice with more number of floors. Incentives like an additional area, money and a new flat has been guaranteed to the existing owners by the builders. Perhaps, this offer is quite tempting and most of the people fall prey to this. Before one accepts this luring offer, there are certain things which should be kept in mind and dealt with a developer.
Why there is a need for re-development?
Re-development of apartment complex or residential or commercial premises has now assumed great significance. “Re-development” refers to the process of reconstruction of the residential/commercial premises by demolition of the existing structure and construction of a new structure. Today, societies are opting to go for re-development than repair. For re-development, builder enters into development agreement with society. Entering into such development agreement does not vest any title of the land in the favour of developer, but merely authorizes the developer to develop the land.
Since the stagnation point has increased in cities, many renowned builders approach the housing societies with old constructions and plan on their re-development. There are many buildings which were constructed 25-30 years ago and are not in a perfect condition. Such building need to be repaired every now and then. This results in large expenses to builders. The older building structures have issues like seepage, weak walls and foundations, leaking water pipes, cracked walls and pavements. Perhaps repairing all these structures of a building will cost a lot of money owning to the expensive materials. Most of the housing societies are unable to maintain and afford the maintenance cost every now and then.
Here comes the role of re-development of building structures. The process of re-development has both advantages and disadvantages. Owning to the high maintenance costs incurred frequently, the re-development process gives a new hope to the housing societies and saves them from paying a huge amount for recurring maintenance. Apart from re-developing the entire building structure, the developer can also offer an array of facilities like a swimming pool, a gymnasium a public park and so on. The re-development aspect also provides more houses in a lucrative and highly-desired location.
If the housing society opts for additional floors or facilities on their property, the floor space index (FSI), which is fixed as per the development control rules of the city has to be checked. The calculation of the FSI is done by dividing the total area on all the floors and the area of the plot where the building is situated.
Advantages and disadvantages of re-development:
| Advantages | Disadvantages |
| It is useful for people who opt for a new home with extra amenities. | Re-development is quite an expensive process. |
| Assigning the re-development task to a developer will help the housing society in terms of finance and in return they can give away one or two floors to the developer. | The entire construction can be time consuming and difficult. |
| Re-development will convert an old unsafe structure in to a new safe structure with more space. | The re-development process will cause inconvenience to the residents as they will have to look for alternatives to stay in. |
| The owners of the old building structure can avail the benefit of a better location and price after the building’s renovation. | This process can lead to the increase in the number of housing society members. |
| Re-development of a building can result in the adding up of additional facilities like a swimming pool, a gymnasium, a park and so on. | This project when given to the builder can result in the delay or increase in the prices. Also many builders might complain about certain things. |
What is the role of the builder in the re-development process?
A builder usually assures a certain amount of cash, an additional area or a mix of both. He may give an alternative accommodation for your temporary stay, foot your rentals or give you a monthly compensation, within which you have to find your temporary accommodation. Once the builder gives a detailed plan, the society members should consult real estate consultants and the developer about the likely future price. Based on this, the society members have to do some calculations to check on the commercial gains.
There are two important things in a resident developer arrangement. One is the commercial angle and another is the technical angle. In fact, at the agreement stage itself, the society residents should appoint a lawyer to draft and finalize the agreement. The society members should ensure the timely completion of the project, which is the most important detail to be mentioned in the agreement. The technical angle refers to the finished good. It should meet specifications and quality as mentioned in the agreement.
The society should have a valid conveyance deed of land and building in its favour. Once the society members’ consent is obtained, the society should submit the documents to the developer. It should contain technical details such as the number of open car parking space, stilt car parking and closed parking allotted to existing society members. The development agreement should spell out the broad specifications and amenities to be offered in the new building. The agreement should mention the schedule of payments, tentative date for vacating the flats, the time period for completion, penalty clause if the developer fails to meet the deadline etc.
