Maharashtra: Recent regulatory

developments and their impact

In order make the real estate
sector more organised and bring-in
the much needed transparency,
several new policies and regulations
saw the light of the day in
Maharashtra. In this
article, CommonFloor has analysed
the top six regulations along with
their impact on the realty sector.
20% LIG housing reservation
he dream of a!ordable housing will soon turn into reality in Maharashtra.
"ith the vision to create slum-free state, the Maharashtra #overnment
issued a noti$cation for reserving %& per cent of the area in every pro'ect for
a!ordable housing.
In (anuary %&)%, the draft
for Inclusive *ousing +olicy
was released by the
government, which made it
compulsory for the
developers to reserve %&
per cent of the area if a
pro'ect is built over or
above %,&&& s,. m.
*owever, the $nal policy
increased the pro'ect area
to -,&&& s,. m. .s of now,
the modi$cation is only
applicable to cities with
population over )& lakh.
/o, how will low income
groups 01I#2
and economically weaker
sections 03"/2 bene$t4
"ell, they will be allotted
residential units si5ed in the
range of 6&&-7&& s,. ft. his
will be done through a
lottery system by M*.8..
For promoting a!ordable
housing, developers will get an additional %& per cent Floor /pace Index 0F/I2
as an additional incentive.
*owever, every coin has two sides. .s per the noti$cation, if M*.8. fails to
purchase the a!ordable units within six months, the builder can sell them in
open market. In an unorganised sector like real estate, there are very high
chances of corruption in this clause. 8evelopers along with o9cials of
M*.8. might intentionally delay the purchase of the :ats, so that the former
gets to sell the pro'ect at the market rate. his could also mean that an
apartment of 6&& s,. ft., for instance, in ;andra 3ast will cost around <s
%-,7&& per s,. ft.
Further, several developers are of the opinion that in a city like Mumbai, plots
si5ed ) acre are rarely available. hus, there are chances that the policy
might hardly be utilised for the city that desperately needs a!ordable
housing.
Hiked reckoner rates
In (anuary %&)-, when Mumbai was already struggling with low sales volume
and piling inventory, the state government hiked the reckoner rates.
First let=s understand what reckoner rates are. .s per the de$nition, << is an
annual statement of property rates on the basis of which the market values
of apartments for stamp duty and registration are calculated.
hus, hiked reckoner rates means increased stamp duty, which in turn will
increase the construction cost. .nd most likely, the developers will pass on
this increased cost to the end-users.
here are total >6> 5ones in #reater Mumbai. .s per the new regulations, in
>)) 5ones the rates have been increased in the range of )&-%& per cent, and
in the remaining %7 5ones, the increase is over %& per cent. hus, the
increased << rates range between )&--& per cent.
Compulsory pen !paces
.fter the recent case by Municipal Corporation of #reater Mumbai 0MC#M2
versus ?ohinoor C@1 Infrastructure Company +vt 1td, where the latter=s
re,uest of relaxation in open space was re'ected, the /upreme Court has
issued a noti$cation for compulsory open space.
.s per the 8evelopment Control <egulation 08C<2 %6, open space of up to )7
per cent for plot si5ed ),7&&-%,7&& s,. m. and %& per cent for plot si5ed
%,7&&-)&,&&& s,. m. is mandatory. .nd for plot si5ed above )&,&&& s,. m., %7
per cent open space is mandatory.
Further, in plots si5ed A&& s,. m, Am passage is also compulsory. It goes for
the redevelopment pro'ects as well. .lso, the open space cannot be
replicated on podium, which has been the common practice until now.
hough this move has been welcomed by buyers, developers are not very
happy. his can have a negative impact on the realty market as developers
will need to rework building designs, which is a tedious task especially for
redevelopment pro'ects.
!"#C circular $or environmental clearance
he #overnment of Maharashtra=s 3nvironment 8epartment recently issued
a circular which made the approvals by local planning authority for pro'ects
si5ed %&,&&& s,. m. and above mandatory. .s per the latest circular, only the
pro'ect that are approved by the local authority will be eligible to approach
the /tate 1evel 3xpert .ppraisal Committees 0/3.Cs2 to obtain
environmental clearances.
his move has been criticised by both developers as well as end-users.
#etting environment clearance is already a tedious task, and now with
mandatory approval from the local planning authority, it will only delay the
pro'ect completion. his in turn will 'ust increase the pro'ect cost.
Cluster redevelopment scheme $or su%ur%s
.fter the collapse of Mumbra ;uilding in .pril %&)6 0illegal building in hane2,
which took >B lives, the decision was rolled out to replicate Mumbai=s cluster
development model in the suburbs and hane region.
.s per the new cluster development policy, building that are older than 6&
years and are legal can opt for this policy. ;uildings that are less than
6&-years old but are in a vulnerable condition will also come under the
purview of this policy. Further, in /outh Mumbai where the minimum area
re,uired to develop is 'ust -,&&& s,. m. as per the policy, it has been
increased to )&,&&& s,. m. for the suburbs. his move will promote
redevelopment and encourage housing societies.
Further, developers will get an additional F/I of -. he policy is good in intent
as it will also ensure sound infrastructure development such as wider roads
0)&m2, proper water and drainage facilities. .lso, from )&& per cent, the
owner=s consent has been reduced to >& per cent. In the case of >& per cent
consent, government will ac,uire the land at the cost of the developer.
*owever, there is negative aspect to this policy. It puts a lot of responsibility
on the land owners who usually do not live in the old, dilapidated buildings.
"&tension o$ cut'o( date $or regularisation o$ slums
Maharashtra cabinet has also increased the cut-o! date for regularisation of
slums in Mumbai city and suburbs. .s per the new ruling, the slums that
have sprouted between the years )CC7 to %&&& will also come under the
purview of this move. his is expected to bene$t about )7 lakh slum
dwellers.
!ourceD CommonFloor.com
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