New benefits for Self Redevelopment Projects by Society in Maharashtra
What are the benefits mentioned in the GR for self-redevelopment issued by the Maharashtra Govt?
Redevelopment is any new construction on a site that has pre-existing uses. It represents a process of land development uses to revitalize the physical, economic and social fabric of urban space. As part of the redevelopment process, government assembles the individual private properties and undertakes a new higher development plan and delivers the necessary infrastructure. At the end, the government returns to each landowner a share of the overall new development that is equivalent to their original land or property ownership. It retains a share of the development that it then sells to recover the cost of the infrastructure improvement.
The government of Maharashtra, to support self-redevelopment had launched the Self Redevelopment Scheme. Under this scheme managed by Maharashtra Housing and Area Development Authority (MHADA), a single window system was set up to expedite clearances and permissions required for self-redevelopment projects. The Maharashtra State issued a Government Resolution (GR) outlining rules for societies undertaking self-redevelopment.
Some of the directives of this Scheme are as follows:
- Single window system – Redevelopment of any property requires approval from many departments and government authorities, which are very time consuming. Some of the approvals are interlinked.
In order to avoid delays, arising as a result of the various departments handling the applications, the GR introduced a single-window system for making applications and granting of approvals. This will help reduce the time and cost for the redevelopment.
- Approvals in 6 months – In order to avoid delays in granting of approvals and arm twisting by officials, the GR stipulates that approvals for applications for self-redevelopment, should be granted within 6 months from the date of submission of the application.
- Increase in Floor Space Index (FSI) – In case the redevelopment is undertaken by the housing society, the society shall be entitled to an extra FSI of 10%, over and above what it is entitled to under the development regulations of the area.
- For projects on roads less than 9 metres, FSI is increased from 0.2 to 0.4 metres
- 50% rebate for TDR – For Transfer of Development rights (TDS), the charges would be 50% of the normal charges payable by the society.
- Discount on premiums to be given – The society shall also be entitled to a discount, in the payment of various premiums for availing of the extra FSI.
- Concession in Stamp Duty – For the existing flat owners of the housing society, there will be no stamp duty liability, with respect to the flats allotted to them in the new building. However, for the additional flats that are being made available to the existing members under the Prime Minister Awas Yojana, the stamp duty shall be restricted to Rs 1,000 per flat.
The cap on stamp duty will be applicable, even if the member is allotted higher area than what he held previously. With respect to the additional flats that are sold at open market price, the stamp duty will have to be paid as per the stamp duty reckoner rates.
- Project to be completed in 3 years – To qualify for the benefits available under the GR and for faster execution, the redevelopment of the building has to be completed within three years from the date of the approval.
- 4% subsidy on interest – Any housing society that applies for construction loans under this GR, shall be entitled to an interest subsidy of 4%, which will reduce the cost of borrowing from 12.50% to 8.50%.
- Tri partiate agreement to be made – The loan agreement here is a tri-partite agreement between the lender (bank), the the contractor and the housing society, where lender gets to appoint one member in the committee, while the other 2 members are appointed by the society.
- Contractors to be registered – The housing society has to appoint a contractor, for carrying out the redevelopment of the building, from a panel of contractors maintained by the approving authority. For empanelment, the contractors have to submit balance sheets for the last three years.
The contractor can be removed, if the committee constituted for monitoring the progress of the project reports undue delay by the contractor, in execution of the project. In such a situation, the contractor can also be black-listed, to make him ineligible for any other project. This requirement will work as a deterrent and ensure that the contractors are sincere, in the execution of the projects undertaken.
- Special grievance Redressal committee to be formed for any problems/ grievances/ complaints.
The housing society has to obtain the written consent of 100 per cent of the members, to proceed with self-redevelopment and for mortgaging the property of the housing society to the Bank, for the purpose of availing of the loan. The society has to pass a resolution in the special general body meeting and forward the same to the deputy registrar of cooperative societies. The acknowledgement of the resolution, as submitted to the deputy registrar, has to be attached with the application form prescribed by the bank, along with other documents. There will be huge benefit to the societies opting self-redevelopment and projects will become viable due to this scheme.