Urban News

Hindustan Times  14.09.2010

The state government is going all out to fulfill its promise of delivering 10 lakh affordable homes within 5 years. As per a government resolution (GR) issued by the state’s Urban Development Department on Monday, every developer undertaking a project on an area of 2,000 square meter (21,528 square feet) or more in the city will have to reserve a certain percentage of flats for affordable housing. Developers who fail to abide by the rule, which will have to be followed with immediate effect across the state, will not be issued an occupation certificate (OC).

“The amendment has been made in the Maharashtra Regional and Town Planning (MRTP) Act, 1966, which asks all municipal corporations and councils in the state to make changes in their development control rules with immediate effect,” said TC Benjamin, principal secretary, urban development.

The GR also explains in detail how the changes will come into effect. In case of buildings that come up on plots bigger than 2,000 square meter, 20-25% of the area will have to be set aside for the economically weaker sections (EWS) and the flats should be approximately 30-40 square meter (a minimum 323 square feet) in area. An additional 10% should be set aside for the middle income group (MIG) where the flats will need to be 41-60 square meter (a minimum 441 square feet) in area.

Similarly, for private layouts in rural areas, builders will have to set aside 20-25% of the 2,000 square meter area in the form of 30-50 square meter plots (a minimum 323 square feet) for lower income group (LIG). Also, 10% area will have to set aside for 50-100 square meter plots (a minimum 538 square feet) for MIG. In return, the developers will get incentives including additional floor space index (FSI) and tax benefits.

“But the rider for all this is that unless the builders’ plan, which is submitted to us for approval, does not account for all these reservations, we will not give them an OC,” said Benjamin. “There will be a separate rule book that will be issued, which will state that none of the clauses can be clubbed. It will have to be followed in complete spirit.”

Even the builders don’t seem to mind the government’s decision. “We have no problem in creating affordable houses. But, the government also needs to ensure that projects are economically viable,” said Rajesh Vardhan, managing director, Vardhman Group.

According to real estate lawyer Vinod Sampat, the government has been forced to take such a decision as builders have been neglecting affordable housing in the city.

Hindustan Times  13.09.2010

FSI is the ratio of permissible built-up area to the size of the plot it is built on and indicates how high a building can be constructed.

However, in its June ruling, the Bombay High Court had said that there was no provision in the MRTP Act that allows the BMC to charge a premium.

The BMC had then stopped collecting the premium and asked developers to include the common areas in their FSI, which limited how high a building could be constructed.

The amendment now makes it possible for the civic body to collect a premium and for developers to build more.

“It was almost a curfew situation for us in the last three months as the projects would not be viable without the exemption,” said Sunil Mantri, a builder and chairman of Maharashtra Chambers of Housing Industry, the apex body of the construction industry. “The amendment is a positive step and will spur construction activity.”

The amendment also permits the BMC to sell an additional 0.33 FSI to developers at a premium, and this too will help construction projects. Rajesh Vardhan, chairman and managing director, Vardhaman Builders, whose two projects in Goregaon were struck because of the verdict, said: “When we purchase FSI from the BMC, the money goes to improve the infrastructure, unlike in other cases where it is pocketed by private parties.”

Vardhan said Transfer of Development Rights (TDR) rates would drop in four months. “In Goregaon, it is expected to come down to Rs 1,800 to Rs 2,000 from the prevailing Rs 2,800 to Rs 3,000,” he said.

TDR is the compensation granted to owners who submit their plot of land for public infrastructure projects. It can be utilised to the north of the original plot. TDR certificates can be sold in the open market.

Real estate experts said the state’s move would help in the correction of property prices in the long-term. “There will be more houses so there will be scope for builders to reduce prices,” said Aditya Bansal, vice-president, Liasas Foras, a real estate research firm.