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Mumbai: Real estate’s much sought after slum TDR now linked to land prices

The incentive scheme has been contentious from the start with developers exploiting it to build slum/PAP tenements in far-off suburbs where land prices are very low and then utilising the additional construction rights on plots in prime locations.

Written by Sandeep A Ashar | Mumbai |
September 27, 2018 1:51:55 am
Mumbai: Real estate’s much sought after slum TDR now linked to land prices Sources said that slum TDR rates, which are often spiked up artificially by a coterie of developers, may also come down on account of the revision.

IN MUMBAI’S construction industry, where a few hundred square meters of additional buildable space can translate into crores, slum TDR (transferable development rights) certificates are equivalent to stocks of blue chip companies. But this much sought after market is set for a major change following the government’s latest tweak to Mumbai’s development control (DC) norms.

Slum TDR is generated when a land owner/developer surrenders his land for building tenements for slum dwellers or project affected persons (PAP) free of cost. It basically allows such owners/developers to transfer the development rights in the form of additional construction rights on another plot.

The incentive scheme has been contentious from the start with developers exploiting it to build slum/PAP tenements in far-off suburbs where land prices are very low and then utilising the additional construction rights on plots in prime locations such as Bandra, Khar and Juhu.

But on September 22, the government, in a bid to break the nexus, modified Mumbai’s DC norms, indexing the slum TDR with land prices of both the generating and the receiving plots. While a similar indexation rule was earlier introduced for TDR generated against the surrender of the buildable public reservation, slum TDR, which accounts for 63 per cent of all TDR generated in the commercial capital, had been left out its ambit.

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Of the 12.36 crore sq m of TDR generated in Mumbai, slum TDR accounted for 7.8 crore sq m, show latest statistics compiled by the Mumbai municipality.

Simply put. If a 10,000 sq m buildable area was used to build slum/PAP tenements in Mankhurd where the land rate is around 16,000 sq m, the developer was earlier being offered 133 per cent of this buildable area as incentive in the form of slum TDR. As per the old rule, the entire 13,300 sq m TDR could then be utilised for the developer’s sale project in (say) Khar where the land rate is 2.05 lakh sq m.

On September 22, the government modified this formula. Firstly, it has revised the incentive being offered as TDR for such project. Withdrawing the uniform 133 per cent incentive being offered previously, it has now linked it to the rate of land on which the slum tenements are being constructed. “We have brought it at par with the built-up area that is offered in lieu of construction of a built-up amenity,” said a senior official.

The buildable area used for the tenements itself has been indexed to the rate of construction and the rate of the developed land. The built up area will be 1.5 times this value. Questions are, meanwhile, being raised over the government’s move to allow 35 per cent additional built-up space over and above it for the quantum of the TDR generated. “There was a sharp drop in the TDR values after indexation. This was done to cushion the impact a little,” a source said.

The government has also indexed the utilisation of this TDR with market rates. In other words, the big difference between land rates in Khar and Mankhurd, in the cited example, will mean that the quantum of the TDR that can be utilised on the Khar plot comes down sharply.

When contacted, Principal Secretary (Urban Development) Nitin Kareer said: “This was being done to ensure that such PAP/slum tenements schemes are not only undertaken in areas where the land prices are low. While the scheme has led to the generation of a large number of tenements, there have also instances of unreasonable gains being made by builders. The revised formula will curb such instances and should encourage developers from planning such schemes across other areas as well.”

Sources said that slum TDR rates, which are often spiked up artificially by a coterie of developers, may also come down on account of the revision.

With the new regulations also increasing the minimum size of a slum tenement, the government has said that for such schemes, a builder will be allowed to claim the difference in the TDR for the built-up portion even for projects where the occupation certificate has been issued. “They will have to obtain the consent of the rehabilitated slum dwellers. The existing tenements will have to be rebuilt to avail the benefit,” said a source. Incidentally, the new rules have also extended the scheme’s benefits to slum rehabilitation projects taken up by government-appointed builders for encroachment inside the Sanjay Gandhi National Park and Aarey Colony.

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