With little available land for ready development, the
Maharashtra Housing & Area Development Authority (Mhada) is scouting for
partnerships with private developers. Mhada has invited expression of interest
(EoI) from realtors, if they would be interested in sharing their land fordevelopment of houses for economically weaker sections (EWS) and the lower
income group (LIG).
According to MHADA, the government agency has only 25
acres readily available for development. Other land parcels are either
encroached or the government of the government has not completed the transfer
procedure. The dearth is forcing it to look at the public-private partnership
(PPP) model.
Builders who would join the state development authority
will be rewarded in two ways. They will get money for construction and would
also be able to develop more houses on the land parcel. This is possible since
Mhada gets a floor space index (FSI, the ratio of permissible build-up area to
the size of the land lot) of 2.5. Private developers, on the other hand, are
allowed an FSI of only 1 (with some exceptions, in parts of Mumbai). They need
to buy transfer of development rights (TDR), if they want to develop more than
the permissible limit. A developer generates a TDR by giving his land for
public use such as widening of a road or slum rehabilitation. He may sell such
rights in the market to another developer. Even after using TDR, developers may
only construct up to an FSI of only 2 in Mumbai.
Mhada’s model will work like this. Assume a developer
has a 10,000 sq mt (or 2.47 acres) plot. Legally, he may build only up to
10,000 sq mt of living space. If Mhada comes into the picture, he gets to
develop housing space of 25,000 sq mt. Of this, Mhada will take between 6,250
sq mt and 10,000 sq mt, depending on the scheme. The realtor will get the rest.
Mhada will also pay the developer the cost of construction. In this case, the
builder gets 5,000-8,750 sq mt extra. Mhada is also looking at making use of
the subsidy the government provides if 40 per cent of the project is used for
housing EWS and LIG. The subsidy is between Rs 60,000 and Rs 1 lakh for each
flat so built, depending on the house size.
Developers are worried that the rates at which Mhada
will sell the flat can impact prices of their flats. The prices can dampen
around 10-15 per cent. But the extra FSI should compensate it,” said one of the
leading property developers.
But he also cautioned that this project can be affected
if builders are allowed extra FSI. The earlier, Vilasrao Deshmukh government
had raised FSI in the city’s suburbs to 1.33 from 1. Before it could be
implemented a public interest suit was filed against this. If the court rules
in favour of the government, builders will get FSI up to 2.66 in the suburbs if
they would use TDR.
Mohan Deshmukh, president of the Maharashtra Chambers
of Housing Industry (MCHI), a builders’ association, feels this partnership is
only feasible if the land is outside Mumbai city’s municipal limits. Within the
city limits, developers can make mor
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