IN A booster dose for the ailing real estate industry, the state government is planning to significantly slash premiums payable by builders for availing buildable area for their projects in Mumbai.
In August last year, just ahead of the state Assembly polls, the then BJP-led government had lowered the premiums payable on the Floor Space Index (FSI) from 50 per cent to 40 per cent of the ready reckoner values for a two-year period. According to sources, the new government is likely to lower these by another 10-15 per cent. Similarly, premiums payable for compensatory fungible FSI in residential and commercial projects are also likely to be slashed.
FSI, also known as floor area ratio (FAR), is the ratio of the built-up area of a project to its plot area.
Industry captains have justified a sector-specific stimulus arguing that the slowdown and the liquidity freeze, worsened by the Covid-19 lockdown, was eroding wealth and causing job losses besides delayed project completion.
A committee, led by HDFC chairman Deepak Parekh, in a recent report submitted to the state government, sought up to 50 per cent reduction in premiums and decrease in ready reckoner rates to bring down input costs for construction projects.
Further, in another incentive for the industry, the government is set to implement uniform and land building development rules across the state. Besides promoting simplified and uniformed building development norms across all municipalities and metropolitan areas, the move, being planned under the government’s Ease of Doing Business (EODB) reforms, will also see an increase in the permissible buildable area indices in a majority of the regions, sources said.
Once these new rules come into force, only Mumbai and certain areas carved out as special planning zones will have their own set of development control regulations. Development permissions in all other municipal corporations, municipal councils, metropolitan regions, and all such areas where the regional plans regarding land use are in the place will be governed by the same set of rules. As of now, every municipal has its own set of regulations.
While the Devendra Fadnavis regime had first published the draft rules in this regard in March 2018, sources said the new government has plans to further enhance permissible FSI and ease certain planning norms while finalising the draft rules to make them even more builder-friendly. Construction premiums, proposed in this case, are also expected to be lowered. Both Chief Minister Uddhav Thackeray and Urban Development Minister Eknath Shinde are in favour of the reform, and a formal sanction to the unified rules is expected to come within the next fortnight or so, officials claimed. With higher FSI on offer, a proposal to make industrial precincts developed by the Maharashtra Industrial Development Corporation (MIDC) a part of the regime is also under active consideration.
The plan under the new draft rules is to promote more mixed land use in such industrial suburbs.
The new rules will also see the skyscraper culture, prevalent in the Mumbai Metropolitan Region, spread its wings to other areas of the state, with a more liberal floor space index regime for affordable housing and slum redevelopment schemes. Under the new regime, builders can avail incentive floor space index (FSI) for cluster redevelopment and integrated township schemes, and slum rehabilitation, across cities. Also, 15 per cent FSI will be available for recreational amenities for big layouts.
While exclusions from FSI computations will be removed, the government will allow an additional 60 per cent FSI over and above the permissible FSI for residential construction, and 80 per cent for commercial activities. For the construction of housing for economically weaker sections and low-income segments, the total permissible FSI up to 3 (depending on the road width) has been proposed.