By Ar Bharat Shah
Development in major part of suburbs of Mumbai is redevelopment of co-operative society buildings and while society proposes to go for redevelopment there are several issues which managing committee has to deal with and one of the important decision the society has to take, what amount towards corpus be ask for from the developer?
With recent modifications in Development Control Regulations for Greater Mumbai the scenario has drastically changed, more so, because of introduction of Fungible F.S.I. Case study given here under may help valuers as well as societies to arrive at a reasonable figure for corpus amount to be ask for from the developer. Development in Mumbai is governed by the Development Control
Regulations for Greater Mumbai, 1991 & amended from time to time.
Vide Notification No. CMS 4311/452/CR-58/2011/UD-11 dated 6th January 2012 the Urban Development Department, Government of Maharashtra has modified the said Development Control Regulations. According to the modifications, sub regulations (3) & (4) are added to Regulation 35 wherein; list of users permitted free of F.S.I. with the special permission of Commissioner, Fungible compensatory F.S.I. over & above admissible F.S.I. may be permitted. Followed by the said modifications, Municipal Corporation of Greater Mumbai issued circular No. CHE/22276/DP/Gen dated 12.01.2012 wherein; the details of quantum of permissible fungible F.S.I. according to the user are quantified as under. Residential user : 35% Non residential user including commercial & industrial user : 20% The said fungible F.S.I. over & above admissible F.S.I. shall be allowed by charging premium at the rate of 60%, 80% & 100% of Stamp Duty Ready Reckoner Rates for residential, commercial & industrial user respectively. In case of redevelopment proposals, for rehab component no premium shall be charged for consumption of fungible F.S.I., however, it is to be distributed on prorate basis for the area of each existing tenements, fungible F.S.I. of one rehab tenement cannot be used for any other rehab tenement or for any of free sale component. The fungible F.S.I. is interchangeable & usable as a regular F.S.I. It is not necessary that same shall be used only for flower beds, balconies, voids, elevation features etc. It can be used for these purposes and /or for enlarging the room sizes, or / and for additional rooms and / or for more dwelling units. Case Study Nature of property : Land with residential society building of ground plus four upper floors occupied by 10 members. Purpose : Society to negotiate with the developer for compensation & corpus. Date of valuation : Present. Description of the property : The property is situated in Town Planning Scheme of Suburb of Mumbai. According to Sanctioned Revised Development Plan for Greater Mumbai 1981-2001 extended up to 2013, property falls in Residential Zone.
According to The Development Control Regulations for Greater Mumbai -1991 (As amended up to 15th August 2007), permissible F.S.I. for the Zone is 1.00 & it falls in T.D.R. receivable zone. Area of land : 1,150 sq.mts. Total area of existing building : 1,025 sq.mts. of carpet area & 1,140 sq.mts. of built up area. F.S.I. consumed : 0.99. The building is more than 55 years old, therefore, society proposed to invite offers from the developers for redevelopment of the property utilizing plot potential, permissible T.D.R. & fungible F.S.I.
[A] Utilization of T.D.R. on the plot: (a) Premium towards purchase of 33% T.D.R. to be purchased from the Government According to Government Notification No. TPB-4308/776/CR-127/2008UD-11 dated 24th October 2011 in case of proposals in which it is proposed to utilize T.D.R. it is mandatory to purchase 33% T.D.R. from the Government at a premium to be worked out based on the Stamp Duty Ready Reckoner Rate for the open land for the particular year, which, in subject case is 2012. Total area of T.D.R. permissible 100% of net plot area : 1,150 sq.mts. 33% to be purchased from Government (1,150 sq.mts. × 0.33) : 379.50 say 380 sq.mts. The land rate for Village & Zone of the said proeprty is `75,500/- per sq.mt. and according to the annexure on page 5 & 6 of the Notification wherein working of premium rate for additional 0.33 F.S.I. is illustrated, for the plot premium towards 33% T.D.R. to be purchased from the Government works out as under. Rate of developed land is `75,500/- per sq.mt. i.e. the rate is between `70,001/- to `1,00,000/- per sq.mt. & according to the annexure on page 5 & 6 of the Notification it falls in Sr. No. 9 wherein for land rate between `70,001/- to `1,00,000/- rate of
premium is `20,300/- + 10% of Ready Reckoner rate exceeding `70,000/- per sq.mt. i.e. `20,300/- + [10% of (`75,500/- less `70,000/- = `5,500/-)] = `20,300/- + `550/- = `20,850/- per sq.mt. Thus, premium amount towards purchase of 33% T.D.R. from Government would be: 380 sq.mts. × `20,850/- = `79,23,000/-. (b) Cost towards purchase of balance T.D.R. from open market Total T.D.R. permissible : 1,150.00 sq.mts. Less 33% T.D.R. to be purchased from Government : 380.00 sq.mts. Balance to be purchased from open market : 770.00 sq.mts. For the locality, rate of general T.D.R. to be purchased from open market is about `2,500/- per sq.ft. / `26,910/- per sq.mt., accordingly, cost towards purchase of T.D.R. including completing the formalities for transfer in D.R.C. would be: 770 sq.mts. × `26,910/- = `2,07,20,700/-.Add cost towards stamp duty at 3%, registration charges at 1% & other miscellaneous expenses estimated at 2% making a total of 6%, accordingly, total amount would be: `2,07,20,700/- × 6% = `12,43,242/- & total cost towards purchase of balance T.D.R. from open market works out to: `2,07,20,700/- + `12,43,242/- = `2,19,63,942/-. (c) Premium towards 35% fungible F.S.I. for free sale component: According to Government Notification No. CMS 4311/452/CR-58/2011/UD-11 dated 6th January 2012 read with circular issued by M.C.G.M. bearing No. CHE/22276/DP/Gen dated 12.01.2012, it is permitted to utilize fungible F.S.I. to an extent of 35% of admissible F.S.I. for residential user by charging premium at 60% of Stamp Duty Ready Reckoner rates for developed land, which for the subject land is `75,500/- per sq.mt. As per latest modifications to D. C. Regulations as sanctioned by Government, for residential buildings 35% additional FS.I. / Fungible F.S.I. is permissible on basic F.S.I. as well as on T.D.R., thus, total F.S.I. would be 2.70. Said fungible F.S.I. includes 10% balconies, flower beds, niches, etc Further, as per the notification balcony area cannot be claimed free of F.S.I. Existing built up area admeasures 1,140 sq.mts. which while redevelopment will be utilized for
re-housing existing occupants & in addition 35% i.e. 1,140 sq.mts. × 0.35 = 399 sq.mts. can be added by way of fungible F.S.I. making a total of 1,140 sq.mts. + 399 sq.mts. = 1,539 sq.mts. for re-housing existing occupants. Total permissible built up area as per F.S.I. 1.00 : 1,150.00 sq.mts. Add 100% permissible T.D.R. : 1,150.00 sq.mts. Total permissible built up area including T.D.R. 2,300.00 sq.mts.
Less built up area for rehabilitation of existing occupants : 1,140.00 sq.mts. Balance area towards free sale : 1,160.00 sq.mts. Area of 35% fungible F.S.I. for free sale component 1,160 sq.mts. × 0.35 : 406.00 sq.mts. Thus, total premium amount payable for 35% fungible F.S.I. for free sale component would be: 406 sq.mts. × `75,500/- × 0.60 = `1,83,91,800/-. (d) Premium towards staircase / lift area to be paid to M.C.G.M: According to Government Notification No. CMS 4311/452/CR-58/2011/UD-11 dated 6th January 2012 read with circular issued by M.C.G.M. bearing No. CHE/22276/DP/Gen dated 12.01.2012, staircase / lift area can be claimed free of F.S.I. with special written permission of Municipal Commissioner by paying premium at 25% of Stamp Duty Ready Reckoner rates for developed land, which for the subject land is `75,500/- per sq.mt. Staircase & lift area is estimated @ 10% of 2,300 sq.mts. which works out to 230 sq.mts. Total premium amount towards staircase / lift area: 230 sq.mts. × `75,500/- × 0.25 = Rs.43,41,250/-. Total amount of (a) to (d) =`79,23,000/- + `2,19,63,942/- + `1,83,91,800/- + `43,41,250/- = `5,26,19,992/- [I]
[B] Cost of construction:
Prevailing cost of construction for residential buildings in Suburbs with standard amenities and specifications is estimated at Rs.25,000/- per sq.mt. of built up area. # Total estimated cost of construction: Built up area : 2,300.00 sq.mts. + Fungible for rehab : 399.00 sq.mts. + Fungible for free sale : 406.00 sq.mts. + staircase and lift area : 230.00 sq.mts. + stilt area : 125.00 sq.mts. (For cost of construction considered @ 50% of proposed 1st floor.) 3,460.00 sq.mts. Estimated cost of construction : 3,460 sq.mts. × `25,000/- = Rs.8,65,00,000/- [II]
[C] Cost towards transit
accommodation to existing
occupants: Cost towards transit
accommodation to existing occupants for 24 months is estimated @ `650/- per sq.mt. of carpet area per month. 1,025 sq.mts. × `650/- × 24 month = `1,59,90,000/- [III]
[D] Other expenses such as
payment to be made to M.C.G.M. under various heads like scrutiny fee, development charges, premium, etc. is estimated @ `6,500/- per sq.mt.: 2,300 sq.mts. × `6,500/- = `1,49,50,000/- [IV]
[E] Other expenses / out of pocket expenses is estimated at `6,500/- per sq.mt.: 2,300 sq.mts. × `6,500/- = `1,49,50,000/- [IV]
[F] Payment towards professional fees to Architect, Structural Engineer, Registered Site Supervisor is estimated @ 10% on the cost of construction of Rs.8,65,00,000/- i.e. `86,50,000/- [VI]. Total of [I] + [II] + [III] + [IV] + [V] + [VI] = ` 5,26,19,992/- + ` 8,65,00,000/- + ` 1,59,90,000/-+ ` 1,49,50,000/- + ` 1,49,50,000/-+ ` 86,50,000/- `19,36,59,992/- Add interest on block up capital @ 21% per annum i.e. 42% for 24 months on `19,36,59,992/-, which works out to `8,13,37,196.64 say `8,15,00,000/-, making a total of project as : `19,36,59,992/- + ` 8,15,00,000/- `27,51,59,992/- {X}
[G] Area available to developer for sale in open market would be: 1,160 sq.mts. + (1,160 sq.mts. × 0.35 fungible) : 1,566 sq.mts. Prevailing rate of ownership flats in newly constructed buildings in the locality is estimated at `2,25,000/- per sq.mt. of built up area, accordingly proceeds available to the developer on sale of 1,566 sq.mts.: 1,566 sq.mts. × `2,25,000/- = `35,23,50,000/- Deduct : Cost of project as worked out above {X} = `27,51,59,992/- ` 7,71,90,008/- Completion period for redevelopment project is estimated as two years, therefore, present value of `7,71,90,008/- is deferred for two years @ 10%, accordingly, differed value works out to:`7,71,90,008/- × 0.82645 = `6,37,93,682.11 say `6,37,95,000/-Based on above, society can negotiate with the developer for the corpus.