The real estate industry, which is facing a crisis caused by poor sales, plans to move the Bombay high court against a state government decision making it mandatory for builders to reserve 20 per cent flats for the economically weaker section.
The rule says if a developer plans to redevelop more than 4,000 sqm of plot area, he has to hand over 20 per cent of the constructed area to the Maharashtra Housing and Area Development Authority (Mhada).
In return, he will get the FSI of the reserved area, in addition to the regular FSI of 1.85. The developer will have to bear the construction cost of 300 sqft for the reserved homes, which Mhada will sell by lottery at prices it will decide.
“We have to create affordable houses through government schemes and policies. The 20 per cent reservation is one such measure to provide affordable housing. We will make it mandatory to implement the policy,” Mhada vice-president Satish Gavai told dna on Saturday.
However, Praful Dedhia, an activist, said the proposal is not feasible. “I plan to convene a public meeting on this issue,” he said.
Developers, too, are not happy with the move. They feel the decision will jeopardise redevelopment in the city, making projects financially non-viable.
“It’s an absurd decision and we are going to challenge it,” a builder told dna, preferring to remain “anonymous for now.”
Secretary of the Builders Association of India (BAI) Anand Gupta said it’s very difficult to implement the decision. “Whether we like it or not, it is a reality that rich people will not like to reside in the same building as the poor. The developer will suffer since no one would like to buy flats in a building, howsoever posh, where the poor are also going to stay.
The builder will be forced to slash prices to ensure the sale of his flats, but this will make his projects non-viable,” Gupta said.
“This policy may look rosy and ideal on paper, but it is difficult to implement,” he said.
“If a building has several luxury flats, the monthly maintenance will be quite high. How can poor flat owners cough up this,” asked Sanjay Razdan, a noted architect. “Also, the economic and social disparities will be huge and will lead to unrest,” he stated.
However, Milind Samel, MD, ‘1 Architectural firm’, said welcomed the policy. “Each person should get a roof over his head. The cost of flats in private developers’ buildings is beyond the ambit of the common man. And, the government does not have enough land to undertake bigger affordable housing projects. So, from where will the poor get homes? he said.
The controversial rule
A developer, who is redeveloping more than 4,000 sqm of plot area, must hand over 20 per cent of the constructed area to Mhada. In return, he will get the Floor Space Index (FSI) of the reserved area in addition to the regular FSI of 1.85. According to developers, this will make projects non-viable.