On 13th September 2019, the Maharashtra State issued a Government Resolution (GR) outlining rules for societies undertaking self-redevelopment. 

The GR states that any building over 30 years old can initiate the process of self-redevelopment.

In a bid to help housing societies carry out self-redevelopment of their old buildings, the Maharashtra state government is offering various incentives and concessions.

Through self-redevelopment, residents can come together to undertake the redevelopment of building instead of the appointing builder to do the needful. 

Society appoints a contractor, project management consultant (pmc) and share the benefits (like bigger homes) which would have otherwise been profited by the builder by selling additional sale area. This encouraging move from Government of Maharashtra will bring about simplicity in the redevelopment process and will induce confidence among residents as they can plan for their societies.

The authorities currently approving the redevelopment of housing societies in the state, same will be the planning authority for the self-development of the cooperative housing societies.

Highlights of the Directives given by State Government are Follows:

• There would be a one-window system for all permissions.
• Faster and time-bound approvals as Plans will be approved within six months from date of submission.
• 10% Extra floor space index (FSI).
• Plots abutting road-width less than 9 meters will be allowed 0.4 FSI at free of Cost.
• Societies will get concessions in purchase of TDR (50% concession).
• Societies will also get concessions on premiums payable;
• Societies will get Installments in premiums payable to Municipal Corporation and don’t have to pay all premiums upfront.
• Rebates on loans of 4%;
• Penalizing erring contractors who delay construction work;
• Reduction in Land Under Construction Cost;
• Reduction in Goods & Service Tax (GST)
• 1000/- Stamp Duty only for Permanent Alternate Accommodation Agreement (PAAA)
• To protect residents from delays, the government has also mandated that the project needs to be completed within three years after approvals are issued.
• There will be a tri-partite agreement between the Housing Society, the Banks Disbursing loans, and Contractor.
• The state has also announced a vigilance committee to ensure quality construction and monitor its the time frame.
• There will be a grievance redressal cell to protect the residents and a mechanism to remove erring contractors and blacklist their firms.

Self Redevelopment in Mumbai

For a dilapidated building needing redevelopment, if the society members decide to undertake redevelopment of the housing society themselves, without the help of a Builder, it is called Self Redevelopment.

Since 2018, the Maharashtra Government has started allowing housing societies in Mumbai to undertake redevelopment of old buildings in their own hands, under the Self Redevelopment Scheme.

Why should you opt for Self Redevelopment in Mumbai instead of builder-led Redevelopment?

Today, there are more than 5800 redevelopment projects stuck in Mumbai city, which has affected more than 1.25 lac families.

These projects are stuck due to various reasons ranging from lack of funds to permission issues to disputes in carpet area allotment. More often than not, these are issues which are directly related to the builder associated with the project.

For Society members, taking up Self redevelopment of their housing society keeps the members safe from any risks arising from Builder mismanagement. This is possible as the overall control of the project including the ownership of the land is always in the hands of the society.

Self Redevelopment Scheme Mumbai

Under the Self Redevelopment Scheme Maharashtra Housing and Area Development Authority (MHADA) has set up a single window system to enable quick approvals for required permissions. It has also been given a directive to create a panel consisting of project management consultants, architects, contractors, which the Self Redevelopment applicants can choose from.

To help the self redevelopment projects in Mumbai secure funding, the Mumbai District Central Co-operative Bank Ltd also called the MDCC Bank has been authorized to provide loans for Self Redevelopment projects in Mumbai covering up to 95% of the project costs.

Mumbai District Central Co-operative Bank Ltd – MDCC Bank

The MDCC Bank or MDCCB, commonly called the Self Redevelopment Mumbai Bank is the only cooperative bank in Mumbai authorized to provide loans for self redevelopment projects in Mumbai.

The bank provides up to 95% of the project finance cost, while the members need to arrange for the remaining 5%. The loan is provided at 12.5% simple rate of interest. Generally, the Society’ contribution of 5% can be generated from the society members who would like to get an extra flat or buy extra space in the redeveloped building.

For projects up to Rs. 50cr, the total loan repayment period is 7 years, out of which 2 years is Moratorium period during which the society doesn’t need to repay anything to the bank. For projects more than 50 cr, the total loan repayment period and moratorium period is 10 years and 3 years respectively.

The project cost considered by the MDCCB includes TDR, fungible premium, rents for alternative accommodation, shifting, re-shifting, brokerage, professional fees, construction cost and any planned additional amenities like solar panels set up, play area, garden etc. 

It is, however, important to note that the bank will provide its part of finance only after the society members have collected their part. In cases where the society members find it difficult to generate the 5% amount, experienced Project Management Consultant like Wedevelopment support in getting loans from NBFCs and private Investors.

Eligibility criteria to avail a Self Redevelopment loan from MDCCB

Firstly, a housing society has to be situated in Mumbai suburban limits and is required to be registered, under the Maharashtra Cooperative Societies Act, 1960. So, such buildings that are not registered as cooperative housing societies will not be eligible for a loan facility from MDCC Bank under the Self Redevelopment Scheme. 

Second, the society should also be a member of the Bank, which a society can become, by purchasing shares of the Bank. 

Third, before applying to MDCC Bank for a Self Redevelopment Loan, a housing society needs to clear off any pending Government dues. Also, the society maintenance should have been paid by all members up to the date of application to the bank.

The most important point in this list, however, is that in order to be able to take self redevelopment of a housing society, the society should be the owner of the land, i.e. the society should have the conveyance deed in its name or should have the land purchase agreement in its name.

Security / mortgage required by MDCCB for financing the project

To get finance from MDCC Bank, the society’s plots like the garden, parking area and saleable flats have to be mortgaged with the bank. But flats owned by the individual members and their rights are not mortgaged.

Procedure to apply for Self Redevelopment Loan from MDCCB

A housing society which has the conveyance deed in its name can start the self redevelopment process by getting the consent of all the society members. For this, a special general body meeting needs to be called to pass a resolution. 

Following is a brief list of documents required to be submitted along with the application form to MDCCB:

1. Acknowledgement of the resolution
2. Land ownership proof – conveyance deed or land purchase agreement
3. Copy of property card, 7/12 extract and original plan of the building
4. Copy of the proposed Self Redevelopment project report which should include details on the budget and cost break-up for the project, copies of required approvals from concerned authorities etc.

5. Copy of the registration certificate and updated byelaws of the society
6. Audited financial statements for the last 3 financial years
7. List of committee members
8. Details of all society members and their unit sizes