75% should agree for redevelopment of housing society in Gujarat

By Gujarat Bureau

Last May, that in May 2019, Gujarat Govt got consent from President for Amendment made to “The Gujarat Ownership Flats (Amendment) Bill” which provided way for redevelopment of thousands of dilapidated buildings in Gujarat.

The Amended At now provide for requisite of 75% consent of members of a housing society to go for redevelopment. Previously it was required to take 100 consent of its member for redevelopment.
A boom in redevelopment of buildings and old structure can be seen since last one in year in the city of Ahmadabad where more than 2 lakhs structures and buildings are going in for redevelopment.
The new Amended Act of Gujarat Co-operative Societies Act have now pave way for a flood of projects and FSI in the city where good locations are in demand and redevelopment of buildings have surpassed new constructions in outskirt areas.
A society which is registered in the state will have to take consent of only 75% for going in for redevelopment.

BMC Premiums on Housing Society Redevelopment

By Nayan Dedhia, MD – Toughcons Nirman Pvt. Ltd. As Redevelopment Consultants, today we come across several proposals for redevelopment and Only 1 Proposal out of 50 Proposals seems Feasible for Redevelopment. When we studied the reason behind it, it was observed that there were several reason why these proposals were not feasible. The major reason was Government / MCGM Share in Revenue: -30%-40% charged by way of various premiums charged by MCGM/MHADA. -2%-3% by way of stamp duty on DA & PAAA -7-8% by way of GST due to GST charged on construction, professional fees & sales brokerage whose ITC benefits also not available. -12% by way of Stamp Duty/ Registration & GST (without the benefit of ITC.) on sales 1% by way of LUC Tax and Miscellaneous Taxes. As per above, government alone charging 50%-60% by way of Taxes & Premiums. Thus by charging such huge premiums / Taxes, the question comes to mind whether the Government really has an agenda to provide affordable housing and house for all by 2022. Thus out of 100% revenue, only 40-50% is left for society members, construction costs, professionals fees, sales & marketing costs, finance cost, etc. Following are the revenues generated by the Government in the redevelopment project. Govt is charging approx 50%-60% and even after bearing the costs and completing the project if any profit remains, then it is also subject to further Income Tax. And without understanding this fact, the Society, Media, Housing Activists, Court etc. all blame only the Developers. Why such premiums/taxes/ charges are higher? Because BMC/Government wants revenue from Real Estate. BMC doesn’t want to compromise on revenue from Building Proposal. But who will explain to them, that due to the exorbitant pricing, if no proposals or fewer proposals come to them then how they will generate the required revenue in the first place? Is it possible that just by increasing premiums without any proposals, they will generate revenue? Hence, there are few things that we would like to know is that; a. Who is deciding the premiums at MCGM? b. Do they take a case study of any project to analyse the various impacts these premiums make on various sizes and types of projects? c. Do they check the feasibility of such various projects to understand what premiums should be charged? If they do it, they will realise that majority of residential projects, despite allowing TDR Loading, plots falling on 9 meters or 12 meters road will be 20% to 40% costlier than their current market price. (For eg. If the market price is Rs.20,000/- per sq.ft. then the landing cost is approx. Rs. 24000/- to Rs. 28000/- per sq.ft.) Since 2011, Fungible area was introduced in lieu of Balcony, Flower bed and elevation features. So this 35% fungible area of tenants’ area has to be added in their proposed carpet area and cannot be transferred or used in Sale Area thus making projects more unviable because of following issues of the plots described as follows: Why these projects are not feasible? There are various projects with different problems, few of them are as follows: Prior to 2010, BMC used to allow 10% Balcony and free Otla, which later on society members included it in their carpet area. Due to this today, in any project already 13-15% more BUA is used in any residential project. For the purpose of infrastructure development, MCGM has taken plot from the society and allowed them to construct it over and above the base FSI of 1 at that time. Due to such road setback FSI, today such plots’ FSI seems over consumed. As per existing policy, BMC does not allow additional FSI over and above existing FSI. MCGM says once benefit taken cannot be claimed again. But originally plot belonged to the society. So why can’t they take benefit again over and above the cap of new FSI, if they opt for redevelopment. iii. Many projects fall near railway boundary, metro rail, highway, Nalla, funnel zone and such projects full FSI cannot be consumed and thus making it unviable. iv. Several projects are smaller plots or odd in their shapes. Such project has various planning constraints and hence due to it, parking costs and BMC premiums increases compare to other plots. Thus making such projects un viable. v. Various plots were developed earlier as per layout and hence BUA of such buildings is 30%-40% more than their existing plot area. In such layouts, common RG & internal roads were developed differently and the plot owner did not transfer its rights to the respective societies. Hence these projects also are not feasible today. vi. As per new DCPR, Society plots falling on Road-width less than 6 meters are not allowed TDR, hence redevelopment is not possible for such type of buildings. vii. In MHADA, plots which are more than 4000 sq.mtrs and falls on 18 meters road, they are compelled to share the area with MHADA, thus making it unviable. viii. Also there are various societies on Collector Lands. If such societies opt to go for redevelopment they have to pay 10%-25% of land RRR for converting to freehold. Apart from above if there have been transfers by way of sale, then collector permission has to be taken and several costs are involved for the same. ix. As per figures declared in assembly, 5800 PROJECTS ARE STALLED IN Mumbai. That means 7%-8% population of Mumbai are homeless. In such projects, Developers have invested a lot of funds in these projects. Costs increased in due course due to the delay of work because of various reasons such as Stay by High Court for Dumping Ground, Introduction of GST, RERA, delay in Implementation of New DCPR, etc. Due to increased costs, if project has to be taken over from current scenario, then it is not feasible for any developer. Govt has to come out with some special policy and bail out such projects. x. For Paghadi Buildings, new DCPR has come with 33(7a), where tenants are to be offered minimum 300 sq.ft. area but that is within the FSI cap, hence such projects are also not feasible for Landowner due to less FSI for sale. xi. There are many society buildings, where the old developer was supposed to hand over the flats to the ULC, but developer sold such flats in the open market. Today such society has to pay the compensation for it before opting conveyance and such costs add additional burden and thus these projects are unviable. There are various such redevelopment projects which are not feasible due to additional costs as these plots falls on Lease Hold Land, MMRDA, Estate Properties, etc. There are many such type of projects where we have also not come across and they are not feasible. Thus as per above, there are several projects which contribute approximately 50% of the society buildings. This is the scenario and still, the BMC says that it wants revenue. Revenue that will be generated at the cost of its citizens, whose buildings are vacated or getting dilapidated and project is not feasible as per the current market scenario. GOVT / RERA/ COURT cannot hold only the developers responsible for this. They have to accept the fact that it is the Govt./MCGM costs that have increased drastically and have disturbed this industry rather than the over- trading or over-commitment by the developer. Demonetisation & RERA are the only excuses for the slow-down of the industry but what has affected the industry more is the increased Govt/MCGM Costs and since 2010, sudden change of several policies overnight. Adding to above woe, the media is also spreading the false scenario of huge inventory available unsold and hence prices will fall up to 50%. Due to such news, market sentiment is getting worse and Govt. is not taking any steps to correct it. APPEAL TO THE GOVT / MCGM Mumbai Redevelopment Real Estate Industry Does Not Require Any Package Or Tax Sops. Only Required Is That Govt/MCGM Should Reduce Their Premiums / Taxes Drastically. Govt has to rethink on its premium / taxes and intervene immediately to take bold steps. If Premiums/Taxes Not Reduced Immediately, That Day Is Not Far When 50% Of The Population Living In Dilapidated Buildings Will Die Under Them Even Without Earthquake.

Difference between Development Agreement and Service Agreements in Redevelopment of Housing Societies

By K.K. Ramani, Advocate (from his book…)
Development agreements, broadly speaking, are agreements between the owners of land/building and the developers to construct/reconstruct large building complexes. The agreements are of the nature of joint venture between the two in which the owner contributes his share by way of the development rights existing on the land and allows the developers to load TDR FSI by procuring DRCs and use the same as per D.C. Regulations. Apart from procuring DRCs the developers also contribute by way of cost o be incurred in construction and construction related activities, manage the construction work and carry out all activities necessary and incidental to such work. The two collaborators to the agreement are generally compensated by a sharing arrangement in which the product, i.e. the constructed space is distributed between the two.
The arrangement is a variant of the contract agreement in as much as the person undertaking the actual construction work is compensated not in terms of fixed agreed monetary consideration but in terms of allotment of some FSI which he is entitled to construct on his own, hold it as is own and dispose it in the manner suited to him subject to the terms and conditions stipulated in the development agreement. It is similar to the contract arrangement in so far as it relates to constructed area to be handed over to the owner except for the difference that the consideration is received by the developer not in money but in term of constructed area and/or use of some percentage of TDR entitlement which can be loaded on the property of the owner.
The arrangement can also be distinguished from a joint venture arrangement in so far as the two parties join together not to earn profit arising therefrom but to share the fruits in terms of the space constructed as a result of such activities. There is no profit worked out from the venture as such. The two parties arrive at their respective profit on the basis of their contribution and the benefit derived as a result of the agreement.
Another distinguishing feature of development agreement is the fact that the property viz. The land/ building continues to remain the property of the owner in the property card. What is given to the developer is the right of development to exploit the percentage of development potential of the area to be kept by him as free sale area which he is entitled to dispose of and make profit therefrom. This was clearly stated by the Bombay High Court in Chaturbhuj Dwarkanath Kapadia Vs. CIT 260 ITR 491 when it observed that “the object of entering into a development agreement is to enable a professional builder/contractor to make profits by completing the building and selling the flats at a profit. The aim of these professional contractors is only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements”. Such agreements are only a mode of remunerating the builder for his services of constructing the building as stated in Gurinder Developers Vs. Kurla Konkan Niwas Co-operative Housing Society (2000) 3 Mah Lj 131

Maharashtra Govt issue guidelines for Redevelopment in GR

By Legal Bureau

Maharashtra government has recently issued government resolution (GR) in which it has brought down consent percentage required for redevelopment to 51% from 70%.

The new guidelines under section 79A of Maharashtra Cooperative Societies Act, 1960 is superseding earlier direction of January 3, 2009.

As per media reports, there were 16,000 derelict buildings in Mumbai with a majority of them located in Byculla, Girgaum, Sewri, Parel, Mumbai Central, Nagpada, Bhendi Bazaar, Mohammad Ali Road and Crawford Market.  Across India, there are several buildings facing problems of fragile floors, water leakage and more.

Some of the important highlights of GR:

(1) This is applicable to all types of redevelopment.

(2) Redevelopment cannot be initiated or decided by Authorised officer/ administrator appointed by the registrar.

(3) Redevelopment can be done of the dilapidated or dangerous to stay as certified by the competent Authority and has to be undertaken under DCR.

(4) Requisition Special general body (SGM) meeting for redevelopment needs to be submitted by 20% members.

(5) For all SGM shall be 2/3rd Members and resolution should be passed by 51% of total members of the society. Written consent has to be taken from more than 51% members for proceeding with redevelopment and also for the appointment of a contractor or the developer.

(6) Architect / PMC have to be appointed in SGM.

(7) Federation who are having conveyance in their name of the federation can only undertake redevelopment through Federation.

Society made a promoter for redevelopment project in RERA

By Legal Bureau Maharashtra Real Estate Regulatory Authority (Maha RERA) in a landmark order, protected homebuyer’s money invested in redevelopment project and directed the builder & society to pay a penalty of Rs 15 lakhs for violating norms of RERA Act, 2016. Maha RERA was hearing the complaint of Kaushal Haria, Girish Chheda & Meghna Visaria and Velbai Haria who had booked flats in New Sangeeta CHS Ltd, Vidyavihar (E) in May 2016. The said project was a redevelopment project between society and builder Valdariya Constructions. The society in December 2011 appointed a builder as a promoter with registered development agreement for sale. In the meantime, a dispute arose between builder and society and matter went to Arbitral Tribunal and the society terminated the development agreement executed with the builder. Authority in order said, “The termination of the development agreement executed between builder and society is after the commencement of RERA Act and this should have done with the permission of Maha RERA. Therefore, transferring the development rights is not valid as this project is registered with MahaRERA.” The arbitral allowed society for self redevelopment. The complainants were seeking interest for delayed project and handover the possession with a parking lot and all amenities. Society submitted the response before the court said, “The flat sold by the builder was illegal and it was sold below the market price. The complainants can seek a refund from the builder however they cannot seek an injunction against them.” Authority said under the provisions of section 2(zk) of the RERA Act, society is all the promoter of the project. Therefore, society is equally liable to the allottees who have booked their flats. Dr Vijay Satbir Singh, Member – 1/ Maha RERA ordered, “Considering the facts the complainants are the allottees of the project registered with Maha RERA and further directs society to join the complainants as its member within a period of 30 days from the date order.” Society is directed to give possession of their flats to the complainants by obtaining occupancy certificate, as the society has taken over the entire project for self-development as per the order of the arbitrator. In addition to this for violation of Section-15, the Maha RERA directs the builder and society to pay a penalty of Rs 15,00,000 to Maha RERA, the order said.

Scrutiny And Vetting Of Redevelopment Documents

By Mr Dilip Shah, Seniour Consul and Annalist for Redevelopment and Society Law

In case of lawsuits, the legal documents related to redevelopment play very important role in all Court Cases under Indian Evidence Act. The definition of document has broader and wider meaning, including ‘Deeds’ and ‘Agreements’. All the documents related to redevelopment are important components of evidence in all cases before judicial as well as quasijudicial authorities. The Documents must be drafted carefully making sure that they are drafted following all principles of redevelopment and perfect legal terms are being used in its content. Section 3 of Indian Evidence Act: 1872 says “Document” means any matter expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter Evidence: “Evidence” means and includes(1) All statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; such statements are called oral evidence; (2) All documents produced for the inspection of the Court; such documents are called documentary evidence.” General Clauses Act 1897: Section 3 (18) says; “Document” shall include any matter written, expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means which is intended to be used, or which may be used, for the purpose of recording that matter. In redevelopment, it is a must that the Landlords of Tenanted Buildings and Housing Societies are required to get their legal documents theoretically scrutinized and methodically vetted by the legal experts/counsellors who are well adept in integrated laws governing the redevelopment. Documents like Feasibility Reports, Tender Documents, Draft of Memorandum of Understanding, Development Agreement, Power of Attorney, Bank Guarantee and Individual Agreement to be executed with each member of the Society that are generally provided by the Developers to the Housing Societies. These documents are drafted by the Advocates of Developers in a deceitful manner with lack of transparency and thus, provide escape routes and full protection to the Developers by neglecting the vital terms and conditions that are protecting the interest of the Tenants and the Members of Housing Societies. The venture of redevelopment of any property involves a massive volume of multi-crore of rupees as also the fate and future of all the Resident Members of the Society. Once the property is handed over to the Developer, the Society has only legal documents in their hand to rely and fall back upon in case of any adverse situation in accomplishing the successful task of the redevelopment. The timely approach of legal experts/counsellors, who are well versed in redevelopment laws in respect of drafting/analyzing all the legal documents pertaining to the redevelopment in a
scientific and systematic manner, can save the menace of such unforeseen adversities. We, as senior counsellors, are well adept in the field of scrutiny and vetting all types of legal documents in most defined and methodical manner. After precise and meticulous study, these drafts are scrupulously vetted, scanned and scrutinized by us and the gray areas/pitfalls and shortfalls are exposed and a written report is given to our Client Societies/Landlords apprising them the areas of alerts and awareness and to impress upon and compel the Developer to correct/include/provide due coverage before finalizing all the legal documents of redevelopment in corporate interest and safety of the Societies and Landlords to achieve the desired results. It is required that the Housing Societies/Landlords must study and understand and try to forestall the negative aspects under Financial/Legal and Technical areas to be termed principally in Development Agreement affecting the rights and interest of Members/Tenants. Senior Counsellors and Professionals can help you to understand the legal documents which require professional assistance. The Housing Societies/Landlords must consider the complexity of the texting and the potential risks and losses if the document is not prepared correctly. The cost of hiring an expert to vet the legal documents is justified by unfolding the potential risk of errors and omissions. Drafting of any document pertaining to the redevelopment is very important component of legal practice and advocacy; one must understand that perfection in drafting is not achieved, unless one understands the relevant provisions under the Acts, Laws and Rules as also facts and language. Many Housing Societies/Landlords suffer in course of litigation due to inferior drafting, lack of documentation skills and without proper understanding of redevelopment laws.

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Annual General Body Meeting of housing societies to be held before 30th September every year

By Legal Bureau

MAHARASHTRA ACT No. XVI OF 2013. (First Published, after having received the assent of the Governor, in the “Maharashtra Government Gazette”, on the 13th August 2013). Amendment of section 75 of Mah. XXIV of 1961. In section 75 of the principal Act,— (a) in sub-section (1), — (i) for the words “three months next after the date fixed for making up its accounts for the year under the rules for the time being in force, call a general meeting of its members”, the following shall be substituted, namely:— “ four months after the close of the financial year, get its books of accounts audited and within six months after the close of financial year to transact its business as may be provided in this Act, call the annual general body meeting of its members”; (ii) the first proviso shall be deleted; (iii) in the second proviso, for the portion beginning with the words “Provided further that” and ending with the words “duly called by the society,” the following shall be substituted, namely:
“Provided that, where such meeting is not called by the society, the Registrar or any officer authorised by him may call such meeting in the manner prescribed and that meeting shall be deemed to be a general body meeting duly called by the society,”; (b) for sub-section (2), the following subsection shall be substituted, namely:— “(2) At every annual general body meeting of a society, the committee shall lay before the society,— (i) a statement showing the details of the loans, if any, given to any of the members of the committee or any member of the family of any committee member, including a society or firm or company of which such member or members of his family is a member, partner or director, as the case may be; the details of repayment of loan made during the preceding year and the amount outstanding and overdue at the end of that year; (ii) annual report of its activities; (iii) plan for disposal of surplus; (iv) list of amendments of the by-laws of the society, if any; (v) declaration regarding date and conduct of its election of its committee, when due; (vi) audit report of the preceding financial year; (vii) rectification report of earlier audit; (viii) annual budget for next year; (ix) any other information required by the Registrar in pursuance of any of the provisions of the Act and rules; and (x) such other business will be transacted as may be laid down in the by-laws and of which due notice has been given. Explanation I.— For the purposes of this sub-section, the expression “family” means a wife, husband, father, mother, brother, sister, son, daughter, son-in-law or daughter-in-law ; PRINCIPAL ACT, 1960 (Red is as per the Principal Act, old) (5) If default is made, in calling a “general body meeting within the period” (general meeting within the period) or, as the case may be, the extended period. Prescribed under sub-section(1), or in complying “with sub-section (2), (2A),” (with sub-section (2)), (3) or (4), the Registrar may by order declare any office or member of the committee whose duty it was to call such a meeting or comply “with sub-section (2), (2A),” (with sub-section (2), (3) or (4) and who without reasonable excuse failed to comply with any of the aforesaid sub-sections disqualifying for being elected and for being any officer or member of the committee for such period not exceeding “not exceeding five years” (three years), as he may specify in such an order and if the officer is a servant of the society, impose a penalty on him to [pay] an amount not exceeding “five thousand rupees” (one hundred rupees). Before making an order under this sub-section, the Registrar shall give, or cause to be given, a reasonable opportunity to the person concerned of showing cause against the action proposed to be taken in regard to him. AMENDMENT IN THE PRINCIPAL ACT AS PER MAHARASHTRA ACT No. XVI OF 2013.: (e) in sub-section (5), — (i) for the words “general meeting within the period or, as the case may be, extended period ” the words “general body meeting within the period” shall be substituted ; (ii) for the words, brackets and figure “subsection (2),” at both the places where they occur, the words, brackets, figures and letter “with subsection (2), (2A),” shall be substituted ; (iii) for the words “not exceeding three years” the words “not exceeding five years” shall be substituted ; (iv) for the words “one hundred rupees” the words “five thousand rupees” shall be substituted.

Maharashtra to establish Appellate Tribunal for Society Redevelopment issues

By Maharashtra Bureau

Government of Maharashtra has indicated that there will be an Appellate Tribunal for society redevelopment matters where most of the redevelopment matters are stuck for want of various issues including majority and minority issue.

Often redevelopment process is stuck in legal battle as majority wants to go for the redevelopment but stuck because of various loop whole in the legal frame work.

A subject expert Appellate Tribunal shall be established to fast track the process of redevelopment and various aspects of it.

Minister for State Housing Mr Jitendra Ahwad had told the news persons that Cabinet has cleared the proposal of establishing Appellate Tribunal for redevelopment matters.

The Appellate Tribunal shall have jurisdiction for entire state of Maharashtra and matters pertaining to redevelopment decided by lower courts and registrar offices.

Development agreement vis-a-vis construction contract for Redevelopment of societies

By K.K. Ramani, Advocate (from his book…)
Development agreements, broadly speaking, are agreements between the owners of land/building and the developers to construct/reconstruct large building complexes. The agreements are of the nature of joint venture between the two in which the owner contributes his share by way of the development rights existing on the land and allows the developers to load TDR FSI by procuring DRCs and use the same as per D.C. Regulations. Apart from procuring DRCs the developers also contribute by way of cost o be incurred in construction and construction related activities, manage the construction work and carry out all activities necessary and incidental to such work. The two collaborators to the agreement are generally compensated by a sharing arrangement in which the product, i.e. the constructed space is distributed between the two.
The arrangement is a variant of the contract agreement in as much as the person undertaking the actual construction work is compensated not in terms of fixed agreed monetary consideration but in terms of allotment of some FSI which he is entitled to construct on his own, hold it as is own and dispose it in the manner suited to him subject to the terms and conditions stipulated in the development agreement. It is similar to the contract arrangement in so far as it relates to constructed area to be handed over to the owner except for the difference that the consideration is received by the developer not in money but in term of constructed area and/or use of some percentage of TDR entitlement which can be loaded on the property of the owner.
The arrangement can also be distinguished from a joint venture arrangement in so far as the two parties join together not to earn profit arising therefrom but to share the fruits in terms of the space constructed as a result of such activities. There is no profit worked out from the venture as such. The two parties arrive at their respective profit on the basis of their contribution and the benefit derived as a result of the agreement.
Another distinguishing feature of development agreement is the fact that the property viz. The land/ building continues to remain the property of the owner in the property card. What is given to the developer is the right of development to exploit the percentage of development potential of the area to be kept by him as free sale area which he is entitled to dispose of and make profit therefrom. This was clearly stated by the Bombay High Court in Chaturbhuj Dwarkanath Kapadia Vs. CIT 260 ITR 491 when it observed that “the object of entering into a development agreement is to enable a professional builder/contractor to make profits by completing the building and selling the flats at a profit. The aim of these professional contractors is only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements”. Such agreements are only a mode of remunerating the builder for his services of constructing the building as stated in Gurinder Developers Vs. Kurla Konkan Niwas Co-operative Housing Society (2000) 3 Mah Lj 131

Redevelopment process of Old Buildings

By Legal Bureau

REDEVELOPMENT OF OLD BUILDINGS

Introduction

Shelter is a basic human need, which has become a major challenge in a country, which is fast urbanizing. Maharashtra is one of the most urbanized states in the country. Whereas nationally 27% of the population was in the urban areas, in Maharashtra, the figure was 42% (Census 2001). Housing in urban areas assumes much greater significance, as it relates not only to basic shelter needs but also provides a facility to the citizens to access services and be part of the development process. Housing implies not only construction of bricks and mortar; it includes the supporting infrastructure, access to transport and employment opportunities.

Meaning

Redevelopment refers to the process of reconstruction of the residential/commercial premises by demolition of the existing structure and construction of a new structure. This is done by utilizing the potential of the land by exploiting additional TDR, FSI as specified under the Development Control Regulations of Municipal Corporation of Greater Mumbai (MCGM).

Types of Redevelopment

Redevelopment of old dilapidated building
Redevelopment of Old Mhada Colony

Why Redevelopment is required
For Existing Owners
Though they are in dire need of extensive repairs, societies are starved of necessary funds required to carry them out. On the one hand, they do not have the resources and expertise to handle the repairs on their own and on the other, the families of the members have expanded and they need larger space to accommodate themselves.
Drawbacks of old buildings:
Lack of services such as security, cleaning, and to operate pumps.
Absence of common facilities like gymnasium and a society office.
Unavailability of proper playing area for children in the compound.
· Perennial leakage in the structure and also in the overhead or ground floor water tanks.
· Unavailability of elevators causing suffering to heart patients and the elderly.
· Absence of a proper entrance lobby.
· Room sizes being too small.
· Interior planning of rooms being unsatisfactory.
· Lack of attached toilets in bedrooms.
· Plumbing/electrical lines lying open
· Size of toilets being too small
· Low resale value due to poor condition of the building

For Builders/Developers
Builders/Developers opting for purchasing land and developing the same, incur huge stamp duty cost on transfer of land. Instead redevelopment of old building reduces stamp duty to a significant extent. For this they enter into development Agreement with Society. Entering into such development agreement does not vest any title of the land in the favor of developer, but merely authorizes the developer to develop the land.
The builder approaches the owner of the land and, instead of buying the land and paying a large amount towards the purchase; he enters into an agreement with the owner for permission to develop the land on the owner’s behalf.   In other words, in a case of development, the builder constructs the buildings at his cost, retains some flats for himself to be sold in the open market, gives a few flats to the landowner and also pays him some monetary consideration. The developer carries out this development work in the capacity of a constituted attorney of the owner and not on his own behalf.
Later, these flats are sold by the developer in the open market and from such sale, he makes a profit. The rate of stamp duty in respect of development agreement being much less than that payable on outright purchase, there’s a significant saving in stamp duty cost. Later, when the building is actually conveyed to a co-operative society or a company, the landowner and builder become party to the conveyance deed on which the stamp duty is payable and the same is also registered.

Procedure for redevelopment of an immovable property.
The consent of the society members must be obtained during society meetings. On or before the execution of the agreement, the society should hand over to the developers, the copy of the conveyance deed in respect of the society’s property, along with certified copies of the property register card, index II, latest electricity bill, water bill, municipal tax bill, N.A. tax bill in respect of the society’s property and also, the copy of the registration certificate of society under the Maharashtra Cooperative Societies Act, 1960.
The list of members with their choice of new flats and parking, area entitlement among others as agreed upon in the new building should be prepared.  The terms about the provision of temporary alternate accommodation to the members during the construction period should also be made clear in the agreement.
Challenges
Inability to assemble all members of the society at a single point of time, as some of the members may not be available. Some flats may be mortgaged to a bank or a financial institution
Some of the members may be interested in purchase of new flats at a discounted rate in the new building.
The title may not be clear, i.e. conveyance deed of the land and structure is not executed in favor of the society.
Anxiety in the minds of the members about possible delay in completion of the project after they have vacated their old flats.
The old documents of the members may not be traceable
Lack of unity amongst the members
The tax issues regarding redevelopment are not clear to the society.
Very high prices are expected on sale of old flats in the case of certain members who are not interested in staying in the new building.
Corpus amount takes a long time to be fixed by the society.
The decision as to which member will get what type of parking takes a very long time.

Government Role.

The redevelopment under DCR 33(7) and 33(9) will continue, it is proposed to introduce the cluster or precinct development approach and to incentivise the same.

CLUSTER APPROACH
The Cluster Redevelopment Approach has successfully transformed the cities of Hong Kong, Singapore and Shanghai. It is proposed to adopt a similar approach for Urban Renewal in Maharashtra State. For the redevelopment of old buildings, it is proposed to undertake cluster development as strategy for expediting and to bring about planned development. In order to promote cluster redevelopment, it is proposed to give higher FSI to large cluster redevelopment. The main objectives of the cluster approach will be as follows :-
a) To transform the fractured development in to cohesive urban unit as laid down in Development Plan.
b) To provide modern accommodation and social services which raise living standards and reduce disparities amongst different sections of population.
c) To provide an environment which permits the residents of such areas to live fuller and richer lives free of physical and social stress that are generally associated with haphazard urban development.
d) To facilitate development and proper maintenance of infrastructure facilities such as sewerage / storm water drainage /DP Roads which cannot be developed because of the present haphazard Development
e) To generate maximum number of surplus tenements for rehabilitation of the occupiers who are on Master List of MHADA. The fact that MHADA will play the nodal role in the cluster approach and shall be a signatory to all the agreements will provide greater acceptability and credibility amongst the tenants and landlords.

JOINT VENTURE FOR REDEVELOPMENT PROJECTS
Till date, the Repairs & Reconstruction Board of MHADA has been able to undertake redevelopment of old and dilapidated buildings under DCR 33(9) Few Other old and dilapidated buildings have been reconstructed through private developers under DCR 33(7). In order to accelerate the redevelopment of old and dilapidated buildings, it is proposed to encourage redevelopment projects through joint ventures in which MHADA along with the tenants, landlords and private developers, if necessary, will come together for undertaking redevelopment of Cluster. Detailed guidelines for this scheme shall be issued by the Urban Development Department separately.

ADOPTION OF EARLIER REPORTS

The problem of Urban Renewal and of old and dilapidated buildings and the need to bring together tenants and landlords is a concern not only for Mumbai and its suburban areas but, also for other cities of Maharashtra State. This problem has been studied in detail and recommendations of Sukhthankar Committee and Afzulpurkar Committee have been accepted by
Government. It is now proposed to extend the applicability of these two reports to all Municipal Areas of Maharashtra. The concerned Municipal Corporation or Council will adopt and
implement the principles enunciated in these reports with suitable local modifications. This will be monitored by the Urban Development Department.

Conclusion

There are constraints on the availability of open land within the city limits coupled with fast growing demand for houses and shortage of housing stock. On the other hand that there are thousands of ageing buildings which are dilapidated and have reached a stage where it is not possible to carry out structural repairs and rehabilitation as the same are not economically viable. The redevelopment of old building has become a necessity since the problem of old and dilapidated buildings in the city of Mumbai grows more acute with each passing year and with each passing monsoon more and more building becomes dangerous and unfit for habitation. Many of these buildings are so run down that they are unrepairable and the only solution is to put them down totally and to reconstruct them.

Scheme which involves adequate and due compensation to the landlord and the tenants/members and to the developer duly is an ideal Redevelopment scheme. This needs faster procedural clearance from Government.

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