Maharashtra government to reconsider proposed TDR policy
The Maharashtra state government has decided to put the proposed uniform Transfer of Development Right (TDR) policy draft on hold and will issue a revised one shortly. Housing minister Prakash Mehta has said that the government will re-look the draft of the revised TDR policy.
The proposed TDR policy had unnerved Mumbai’s builders because it linked the height of buildings to the width of the roads. While town planners and activists have said that the step can curb unabated construction of tall buildings on narrow roads that pressure the crumbling civic infrastructure. But developers complained the new rules will make most redevelopment projects unviable.
What is TDR?
TDR is virtual space, given in lieu of reserved space, by the state government. A plot-owner gets TDR if his plot is reserved for a specific purpose (like a school or a playground) and cannot be built upon. In exchange for giving up that land, the plot-owner gets virtual space (TDR) which he can sell in the open market.
TDR is a vital tool for builders because it allows them construction rights over and above the normal FSI that is currently permitted when they construct or redevelop buildings in suburban Mumbai. TDR is generated when the developer/owner surrenders land to the government and agrees to re-house slum dwellers or project-affected persons free of cost. In turn, a TDR certificate is issued that gives him additional construction rights in the suburbs, but only to the north of the plot he has surrendered.
As per the earlier draft, 0.75 TDR along with an FSI of one was proposed for a road width between 12 to 18 m. For a road width of 18 -24m, 1 TDR was proposed, and for a road width of 24-30m, 1.25 TDR, and for a road width above 30m, the TDR proposed was 1.5. In Mumbai, there are only a few roads like Swami Vivenkanand Road and Link Road, which are more than 30 metres wide. The rest of the roads are below 9 metres. In fact, most of the proposed redevelopment projects involve roads which are less than 9 metres wide. This would have meant redevelopment of 80 per cent of Mumbai’s old and dilapidated buildings would not take place.
Impact on real estate redevelopment
Experts say about 40 to 45 per cent of Mumbai’s road are between 9.15m and 13.4m wide. More than 60 per cent of plots in Bandra, Khar, Santacruz, and in town-planning schemes are next to roads of such width.
According to experts a builder executing a redevelopment project today can retain 35 to 40 per cent of the total built-up area for free sale with FSI 2. With the new proposal, the sale component will fall by 25 to 30 per cent. This is not adequate to cover the cost of construction, cost of buying TDR from the market and other incidental costs. Moreover, a builder will not be able to offer additional space to existing owners in new flats.
The plan to increase FSI for roads 30m wide or more will benefit projects abutting roads like LBS Marg, Swami Vivekanad Road, Jogeshwari-Vikhroli Link Road, Santacruz-Chembur Link Road and Dr E Moses Road. But activists fear this will add more traffic on such roads and defeat the government’s move to reduce congestion.
Loopholes in the policy draft
The proposed draft also wanted to make TDR utilization universal in the suburbs. Today, TDR generated can be used only north of that plot. Now it is proposed to be used anywhere in the suburbs by charging a premium based on the the draft circular, however, leaves a loophole for Mumbai itself. The circular is applicable to all municipal bodies formed under the Bombay Provisional Municipal Corporation (BPMC) Act 1949 or Municipality Act. But the BMC, formed in 1888, has its own Act and policies. Developers say that Mumbai has always got different policies and norms than the rest of the state. The state government should clarify this point, otherwise the TDR lobby will exploit the developers by raising TDR rates.
Land value in Mumbai is very different from, other cities in Maharashtra such as Pune or Nashik. If the state goes for a uniform policy, a person having a TDR for 1 acre of land in Nashik will be able to sell it in Mumbai and realise a much higher price. This will hit the Mumbai real-estate market hard. If the state adopts a uniform TDR policy, city development will be stuck and it will have a cascading effect on development and growth.