In a major change, the Maharashtra Housing and Area Development Authority (MHADA) has decided to revise its 2007 redevelopment policy. It will mark updates in the premium charges and payment terms, aimed at making the redevelopment of old housing societies in Mumbai’s real estate market financially more viable.
For projects carried out under Regulation 33(5) of the Development Control and Promotion Regulations (DCPR) 2034, the MHADA has made changes in the premium charges for commercial floor space.
The new policy is aimed at ensuring that the premium to allocate commercial built-up area gets determined using a formula that takes into account land rates, market values, and the intended usage.
The new rule will be replacing the previous one that required developers to pay an amount 1.5 times the residential rate for commercial space. Developers argue that this system made projects financially unviable.
MHDA officials say that the revised approach is aimed at balancing the residential and commercial market rates. The balance will ensure that a more equitable premium structure is achieved.
According to MHADA, the revision comes after real estate developers' apex body CREDAI–MCHI made efforts highlighting the need for parity between commercial and residential charges and ensuring balanced growth.
Moreover, MHADA has also approved developers and housing societies to pay the premium for additional built-up area in four equal installments with interest.
According to MHADA, the revised policy will ensure that projects that are within a plot area of less than 4,000 sq. m can pay the premium in five installments. The first installment, which will be 10% of the total premium amount, needs to be paid within one month from the date of issuance of the Letter of Intent.
The remaining four installments, each amounting to 22.5%, will be payable at the end of 12, 24, 36, and 48 months, respectively, along with the applicable interest.
