Why Maharashtra is planning an overhaul of its rent control ‘pagdi’ system

On Thursday, Maharashtra Deputy Chief Minister Eknath Shinde told the Assembly that the state would frame rules for the redevelopment of the old “pagdi” buildings, calling it a step towards making the city “pagdi-mukt” (pagdi-free).

Shinde said the new rules would ensure that redevelopment becomes possible on a large scale. He added that the new rules would protect the rights of both tenants, who want security, and landlords, who want fair compensation and return of their property.

What is the pagdi system?

The pagdi system is an old tenancy arrangement that became common in Mumbai before Independence. A tenant paid a one-time upfront amount (a premium ) to the landlord. In return, they could stay in the house almost permanently by paying a token rent — as low as a few hundred rupees a month.

Because these rents stayed fixed under the Maharashtra Rent Control Act for decades, landlords earned very little and had no revenue to repair the buildings. Over time these became unsafe.

Tenants, meanwhile, feared losing their homes during redevelopment and therefore resisted any change or move to redevelop these buildings. As a result, redevelopment remained stalled for years.

Some tenants were also given a small share in the property, even without full ownership, and could sell their tenancy rights to others, sharing the proceeds with the landlord.

All of this created long-term challenges. Landlords had little incentive or money to maintain or repair buildings. Additionally, over the years, many transactions involved large cash payments, creating opaque practices. Every monsoon, there is the fear of buildings collapsing.

“There were many issues in the earlier Government Resolutions (GR) issued by the government. We wanted the rights of tenants to be protected. In the past we have seen how during the redevelopment the tenants were thrown out of the city to suburbs for years. Now with this change in rules we hope for the redevelopment to take place and tenants rights are protected,” said Vinita Rane, general secretary, Pagdi Ekta Sangh.

Currently, the Maharashtra Housing and Area Development Authority undertakes the repairs of these buildings. But Rane said many buildings, especially in South and Central Mumbai, need complete redevelopment — including demolitions — and not just repairs.

What has the government proposed?

The government is planning a balanced framework to ensure redevelopment while protecting the interests of all parties.

• Tenants will get a flat that is equal in size to the one they currently live in.
• Landlords will get clear development rights in recognition of their ownership, corresponding to their ownership, ensuring fair compensation.
• For families with low income, the government will offer additional support so their rebuilt homes come at no cost.
• If the available construction space on a plot cannot be fully used, for example, due to height restrictions, the remaining space will be converted into development rights that can be used or sold elsewhere.

Who benefits from the new rules?

Tenants are expected to gain by getting safer, rebuilt homes without losing their space or rights. For many, this could mean moving from an old tenancy to an actual ownership flat.

Landlords, who for years earned little rent and struggled with maintenance, will finally have a clear path to redevelopment and fair compensation.

Developers, too, may find projects easier to execute once disputes are cleared and rules are predictable.

How many buildings are affected?

Shinde told the Assembly that Mumbai has over 19,000 pagdi/cess buildings — most of them built before 1960. Some have been redeveloped, but many have collapsed due to age and neglect. More than 13,000 are still awaiting redevelopment.

Fast-track courts to clear pending disputes

There are around 28,000 legal disputes between tenants and landlords pending in local courts. These cases often block redevelopment for years.

To clear the backlog, the government will set up fast-track courts with High Court approval, aiming to clear all 28,000 pending cases within three years.

Shinde stressed that the process will ensure fairness to both tenants and landlords. He also assured that the government is committed to addressing any further obstacles that may arise during implementation.

Importantly, existing redevelopment options in Mumbai will continue. The new framework is meant to act as an additional choice for buildings stuck for years.

What will this mean for Mumbai?

If implemented effectively, the framework could allow thousands of families living in old, unsafe buildings in South and Central Mumbai like Lalbaug, Parel, Dadar, Byculla and other parts of the city to move into modern, secure homes. Landlords will finally receive clear compensation and rights, and developers will benefit from predictable rules.

For a city where building collapses have repeatedly endangered lives, this step could transform pagdi buildings, allowing redevelopment to proceed in a safe, fair, and transparent way. Areas that have witnessed repeated building collapses may see a renewed push for redevelopment.

The next few months will be important, as the government prepares the draft rules and invites suggestions. But the announcement marks the strongest attempt so far to resolve a problem that has held back Mumbai’s redevelopment for decades.