New Revenue Sharing Model To Redevelop MHADA Colonies
The Maharashtra state government has agreed to a revenue-sharing model between the Maharashtra Housing and Area Development Authority (MHADA) and private developers in an attempt to encourage more developers to take up redevelopment of housing colonies. The new policy is also aimed at unlocking prime real estate in Mumbai.
Reason for the new policy
There are about 104 MHADA colonies comprising of about 225,000 apartments over an area of 1,560 hectares. Most of these flats were built before 1940 i.e. they are at least 40-60 years old. They are considered dangerous for human occupation and are prone to collapse, by the Greater Mumbai municipal corporation.
In 2008, the housing authority had introduced a redevelopment policy which allowed builders to get additional FSI either through payment of a premium of 40% on ready reckoner price or through sharing houses built by using additional FSI. Under the government’s 2010 policy, apartment-sharing was made mandatory. Under this policy, 67% of the apartments built by the developers was to be handed over to MHADA using the additional floor space index (FSI) incentive. The FSI would be 1.5 within Mumbai city and 1.33 in the suburbs.
These policies hadn’t received much positive response from builders for taking up redevelopment projects. The new policy is expected to bring more positive response from developers for these projects.
The revenue-sharing model
According to the new policy, if the construction-to-land cost ratio is 1:6 or more, 70% of the revenue will go to MHADA while the builder will retain 30% of the revenue. If the ratio lies between 1:4 and 1:6, the government will receive 65% of the revenue while the developer will retain the remaining. The revenue share will involve apartments and not cash.
The incentive FSI is linked to the construction-to-land cost ratio in the new policy. For example, if the ratio is 1:2, the incentive FSI for the builder would be 70% and if the ratio is 1:6 or more, the incentive FSI would be 40%. This means that, lower the ratio between the construction-to-land cost, higher would be the incentive FSI to the builder.
Response for the new policy
While the real estate sector has welcomed the new policy, housing right activists have criticized it saying that the policy is biased towards builders and ignores the concerns of residents of MHADA colonies. Real estate developers and lobbyists have said that it is a win-win situation for the developers, MHADA and the colony residents as the projects are more viable now and the benefits can be shared. They have also expressed minor concerns over the policy potentially being counter-productive without proper monitoring.
One criticism has come regarding the size of the apartments. One of the housing colony welfare association members said that the new policy may have ignored the request to provide 484 sq.ft apartments for original flat holders. The member said that the government may not have changed the policy of offering only 300 sq.ft apartments.
