Upcoming realty projects will become more expensive if the Maharashtra government passes a proposal to change the rules about usage of Transfer of Development Right (TDR). Besides, the government's decision will adversely impact the redevelopment of 89,000 old and dilapidated buildings in Mumbai.
Upcoming realty projects will become more expensive if the Maharashtra government passes a proposal to change the rules about usage of Transfer of Development Right (TDR). Besides, the government's decision will adversely impact the redevelopment of 89,000 old and dilapidated buildings in Mumbai.
The Devendra Fadnavis government proposes to link the usage of the Transfer of Development Right (TDR) to the width of the roads adjoining to the project.
According to the state government's draft circular, the developers will not be able to use TDR in projects which are next to a road narrower than 9 metres. Interestingly, in Mumbai, 80% roads are narrower than 9m. Only a few roads are wider than 30m, including SV Road and Link Road.
TDR is virtual space, given in lieu of reserved space, by the state government. A plot-owner gets TDR if his plot is reserved for a specific purpose (like a school or a playground) and cannot be built upon. In exchange for giving up that land, the plot-owner gets virtual space (TDR) which he can sell in the open market.
Developers buy TDR to add more floors to their buildings. A week ago, TDR was sold at Rs3,500 per sq ft, and the rate has now shot up to Rs5,000 per sq ft. It is because of the linking of the TDR to the width of the road. "Developers are in a hurry to buy the TDR and complete the projects before this new uniform TDR policy comes into force. The TDR lobby has increased rates and is making money over this circular," said Sunil Mantri, president of NAREDCO, the developers' umbrella body.
At present, the developers are allowed to use one TDR irrespective of the width of the roads. The government's draft circular, however, says, "Now, higher the width of the road, more the TDR to be used by the developers along with the available floor space index (FSI) of 1 for his project. If the road width is between 12m to 18m, then 0.75 TDR will be used. For the road width between 18m to 24m, one TDR will be uploaded. For road width between 24m-to-30m, 1.25 TDR can be uploaded. If the road width is more than 30m, the developer can use 1.50 TDR."
Mantri said that the government is changing TDR rules without adequate contemplation. "Because of this proposed decision, redevelopment of 89,000 buildings will come to a grinding halt. Redevelopment will become financially unfeasible for developers. Besides, these buildings need urgent reconstruction because most of them are crumbling. The state government should review its proposed decision in the larger interest of the city and end users," Mantri said.
Senior architect Milind Samel requested the state government for one year's waiver of the new rules in which developers could complete existing projects.
The draft circular, however, leaves a loophole for Mumbai itself. The circular is applicable to all municipal bodies formed under the Bombay Provisional Municipal Corporation (BPMC) Act 1949 or Municipality Act. But the BMC, formed in 1888, has its own Act and policies. A developer said, "We are really confused whether this circular will be applicable to Mumbai or not. Mumbai has always got different policies and norms than the rest of the state. The state government should clarify this point, otherwise the TDR lobby will exploit the developers by raising TDR rates."
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