Redevelopment of housing societies in Mumbai may fetch one free room per flat

Soon, private housing societies that are over 30 years old and wish to undertake redevelopment can claim an additional 15% built-up area per flat at no extra charge. "This will translate into one extra room per flat," said state urban development secretary Nitin Kareer, unveiling the features of the new development plan. 

The incentive will apply to nearly 40,000 private housing societies in Mumbai, activists say.

But critics are not impressed as they feel the move does not go far enough and may still not attract builders interested in redeveloping private societies. Developers hope to exploit maximum FSI (going up to 3.37) permitted in redevelopment to earn a profit from the free sale component of a project. Initial investments include buying additional FSI for the project. Then FSI of 1.3-1.5 is generally utilised to rehouse existing occupants and remaining 1.8-2 FSI is kept for the sale component. Bigger plots yield a chunkier free sale component, translating into higher profit margins. 

"Many older private buildings are very small, with 10-15 flats. So the 15% additional built-up area may not be enough to attract big developers. As it is, the smaller developers are facing losses," said Gulam Zia, executive director of Knight Frank.

He said though it was a welcome move, the extent of its impact on the market remains uncertain. "Earlier, there a cluster redevelopment option, but it barely took off," he said.

Developer Nayan Shah of Mayfair Housing said the high premium charged by the BMC for adding FSI on a plot made redevelopment of private societies unviable for developers.

Housing rights activist Chandrashekhar Prabhu said he disagreed with the premise of charging private societies for the use of additional building rights. "The land and the building belongs to the private cooperative housing society. Why should it pay a hefty rate to a builder for the use of additional FSI? And if the DP is allowing 15% additional space without charging premium, that it is not good enough," said Prabhu.

However, Ramesh Prabhu, Chairman of Maharashtra Societies Welfare Association differed. "Over 20,000 housing societies in Mumbai are awaiting approvals for redevelopment and this incentive may be a major boost," he said.

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