The Maharashtra Housing and Area Development Authority (MHADA) has approved a significant policy change aimed at enhancing the viability of redevelopment projects under its Mumbai Board. This change revises the method of calculating premium charges for commercial floor space.
During a recent MHADA authority meeting, the decision was made to alter provisions from a previous resolution issued in June 2007. Previously, housing societies or developers redeveloping buildings within MHADA layouts were required to pay premiums calculated at 1.5 times the residential rate, with a minimum of 60% and a maximum of 142.5%. Developers expressed concerns that this structure hindered the financial feasibility of their projects.
Realty developers raised issues with MHADA, arguing that the “1.5x rate” presented an unfair burden, contributing to slower redevelopment in MHADA layouts. They noted that Regulation 33(5) of the Development Control and Promotion Regulations (DCPR) 2034 lacked clarity on premium calculations for residential versus commercial spaces.
In light of these concerns, MHADA has introduced a transparent formula-based approach for determining premiums.
Under the new system, premiums for additional commercial space in redevelopment will not be a fixed multiple of residential rates. Instead, they will follow a formula starting with the Ready Reckoner land value, applying the DCPR percentage for commercial use, and adjusting it based on comparisons between local commercial and residential prices. The resulting figure will establish the premium rate.
This updated formula aims to align charges with actual market conditions, promoting fairness and alleviating financial burdens on housing societies and developers. Officials indicated that this move will enhance objectivity and transparency, facilitating a better balance of costs for redevelopment projects.
The decision responds to growing population pressures, infrastructure demands, and Mumbai’s rapid economic growth. By streamlining the redevelopment process, the government seeks to accelerate housing supply in the city.
Officials anticipate that this policy shift will revive stalled projects and motivate developers to engage in the redevelopment of old MHADA layouts, thereby contributing to Mumbai’s housing stock while meeting public housing objectives.
