FSI OF 3 FOR REDEVELOPMENT OF CESSED BUILDINGS UNDER MODIFIED DCR 33 (7) OF 2013

The Maharashtra Regional and Town Planning Act, 1966 has accorded its sanction towards the modification in the Regulation No. 33 (7) of Development Control Regulation, 1991 for Greater Mumbai followed by Notification No: TPB 4312/CR-512012/UD-11 Dated 14th August 2013 issued by Government of Maharashtra, Urban Development Department, Mantralaya, Mumbai 400 032.

The said modification under the Development Control Regulations (DCR) for Greater Mumbai, 1991 has been sanctioned by the Government under Section 31(1) of the Maharashtra Regional and Town Planning Act, 1966 vide Urban Development Department’s Notification No: DCR/1090/UD-II (RDP) Dated 20/2/1991 so as come to force with effect from 25th March 1991.

Regulation No. 33 (7) of the said Regulations deals with reconstruction or Redevelopment of Cessed Buildings in the Island City by Cooperative Housing Societies or of old buildings belonging to the Municipal Corporation of Greater Mumbai or of old buildings belonging to the Police Department.

The Government in the Urban Development Department by its Notification No.TPB 4308/3224/CR-268/08/A/UD- 11 Dated. 21st May 2011 had modified the Provisions regarding the FSI admissible in case of Redevelopment of “A” Category Cessed Buildings.

The Govt. being of the opinion that in larger public interest the Provisions in respect of “A” Category Cessed Buildings need to be made applicable to “B” and “C” Category Cessed Buildings also, had, in exercise of the powers conferred under sub-section (1AA) of Section 37, issued the Notice No.TPB-4310/2583/CR-206/10/UD-11, Dated 28th July 2011 for inviting suggestions or objections from general public with regard to the modification proposed in the schedule appended to the said Notice and appointed Deputy Director of Town Planning, Brihanmumbai as the Officer to submit a report on the suggestions/objections received in respect of the proposed modification to the Govt. after giving hearing to the concerned persons and the said Corporation.

The said Notice was published in the Maharashtra Government Gazette (Konkan Division Supplementary) Dated 25th/31st August 2011 and the said Officer has submitted his report after completing legal procedure through the Director of Town Planning, Maharashtra State vide its Letter No.496 Dated 21.3.2012;

Considering the report of the said Officer and suggestions or objections received from the general public and the said Corporation and after consulting the Director of Town Planning, Maharashtra State, the Government is of the opinion that the said proposed modification is required to be sanctioned, with some changes.

Now, therefore, in exercise of the powers conferred upon it under Section 37 (1AA) (c) of the said Act, the Government sanctioned the proposed modification to Regulation 33 (7) of the said Regulations with certain changes  the date of publication of this Notification in the Government Gazette as the date of coming into force of this Notification and directed the said Corporation that, in the Schedule of Modifications sanctioning the said Regulations, after the last entry, the Schedule referred to at (A) above shall be added.

Modification under DCR 33 (7) shall apply to Reconstruction or Redevelopment of Cessed Buildings in the Island City by Co-operative Housing Societies or of old buildingsbelonging to the Corporation or of old buildings belonging to the Police Department.

For reconstruction/redevelopment to be undertaken by Cooperative Housing Societies of existing Tenants or by Co-op. Housing Societies of landlords and/or occupiers of cessed buildings existing prior to 30/9/1969 in Island City, which attract the Provisions of MI-LADA Act,1976 and for reconstruction/ redevelopment of the buildings of Corporation, the Floor Space Index (FSI) shall be 3.00 an the Gross Plot Area or the FSI required for rehabilitation of existing Tenants plus incentive FSI as specified herein under whichever is more.

For reconstruction/redevelopment of buildings belonging to Police Department, Police Housing Corporation, Jail and Home Guard of Government of Maharashtra, constructed prior to 1940, the Floor Space Index shall be 2.5 on the Gross Plot Area or the FSI required for rehabilitation of existing tenants plus incentive FSI as specified in Appendix-HI whichever is more.

Provided further, that reconstruction/redevelopment undertaken by proposed Cooperative Housing Societies of Landlords  and/or Occupiers of cessed building   existing   prior  to 30/9/1969 and where composite development is undertaken  by  different  owners of 5 or more plots, the FSI  required for rehabilitation of existing tenants plus incentive FSI as specified in herein under will be available.

The FSI for rehabilitation of existing tenants/occupiers in a reconstructed building and incentive FSI that will be available shall be as under:

In case of redevelopment of cessed building existing prior to 30th September 1969 undertaken by landlords and/or Co-operative Housing Societies of landlord and/or occupiers, the total FSI shall be 3.00 on the gross plot area or the FSI required for rehabilitation of existing occupiers plus 50% incentive FSI, whichever is more.

In case of composite redevelopment undertaken by the different landlords and/or Co-op. Housing Societies of landlords and/or occupiers jointly of 2 or more plots but not more than 5 plots with cessed buildings existing prior to 30/9/1969, the FSI permissible will be 3.00 or FSI required for rehabilitation to existing occupiers plus 60% incentive FSI, whichever is more;

Provided, however, that if the number of plots jointly undertaken for redevelopment is six or more, the incentive FSI available will be 3.00 or FSI required of Rehabilitation for occupiers plus 70% incentive FSI whichever is more.

Due to increase in FSI up to 3, the redevelopment spree is expected to transform the face of the realty sector.

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REDEVELOPMENT OF CESSED BUILDINGS IN SOUTH MUMBAI WITH NEW FSI OF 3

After keeping it on hold for two years, the redevelopment of cessed buildings in South Mumbai with new FSI of 3 under amended DCR 33 (7) has been recently proposed by the State Government in South Mumbai for the buildings under B and C category constructed prior to September 30, 1969.

A question arises here that while the decision would free the vertical growth in a city that’s clamouring for space, would it not put an enormous strain on Mumbai’s already high-pitched infrastructural factors like water, transportation and electricity etc?

However, it has to be guessed whether the extra supply of housing in the coming days would have any significant impact on property prices in areas under redevelopment. Even though property markets in several cities have gone down, the degree of correction has been rather not that significantly felt till the date in Mumbai.

The buildings, pre-1969 under tenanted properties in the island city of Mumbai were classified into three categories: A (pre-1940), B (1940-1950) and C (1950-1969).

It is also required of the Government to encourage cluster redevelopment in the city as individual development of buildings does not create social infrastructure like proper parking, gardens and open spaces and other facilities for citizens.

Irrespective of its category, the redevelopment of 15,000 odd cessed buildings will now be a viable proposition for Developers. FSI is the amount of construction that can be made in relation to the size of the plot. Buildings constructed before 1969 which pay cess to the Government are called cessed buildings.

Over 12,768 structures were built before 1940 were classified under A category and until now, the State granted FSI of 3 to these buildings while those buildings constructed between 1940-50 (B category) and 1950-1969 (C category) were given FSI of 2.5.

The FSI of 3 has now been extended to all buildings constructed before 1969 (both B and C category included). In other words, clubbing the buildings that were earlier classified as category A, B and C, are now entitled to FSI of 3 for redevelopment.

Category B constitutes 1,169 buildings built from 1940 to 1950. In category C, from 1959 to 1969, 1,058 cessed structures cropped up.

In addition to the extended FSI of 3 and according to the DCR Amendments with effect from 06/01/2012, the tenants of cessed buildings shall also be entitled to Fungible FSI. Balconies, Flower Beds, Terraces, Voids and Niches are now counted in the FSI. To compensate for the loss of free-of-FSI areas, Fungible FSI to the extent of 35% for Residential Development and 20% for Industrial and Commercial Developments has been allowed with premium.

Fungible FSI would be available at 60 per cent premium for Residential, 80 per cent for Industrial and 100 per cent for Commercial at the Ready Recknor Rates (RR Rates) which are revised from this January 1st, 2012 ranging between 5 per cent and 30 per cent in 716 Zones of Mumbai. The exclusive benefit of Fungible FSI is that it can be used for making Balconies, Flower Beds, Terraces, Voids and Niches with an option that it can be used for constructing bigger habitable areas.

For several years, Developers were reluctant to undertake redevelopment of these buildings as the plots on which they were constructed are small and it was difficult to redevelop them. As a result, residents continued to suffer in old structures with the constant fear of the buildings collapsing.

The Government Resolution on the FSI hike to 3 will be passed in two weeks from now. The proposal to increase FSI for all the cessed structures irrespective of its category was pending with the State since September 2009.

Though the extra FSI will hardly affect densely populated chawls which have smaller plots with bigger population ratio, the main beneficiary of the escalation in the FSI will be tenants of Dadar, Parel, Worli, Matunga, and Sion. These areas have more than 4,000 cessed buildings. A majority of cessed buildings are in island city and a few in suburbs. Grant Road houses 3,354 cessed structures, the largest chunk in the city, followed by Tardeo and Byculla with 3,067 and 2,264 respectively.

Cessed buildings in areas such as Bhendi Bazar, Sandhurst Road, Byculla and Grant Road will fall under the cluster redevelopment bracket and will enable the Developers an FSI higher than 3. Redevelopment in Worli, Dadar, Parel, Matunga and Sion had so far offered lesser incentive. These being prime locations will certainly attract Developers.

A majority of buildings collapse as the dilapidated structures under cessed buildings are precarious and unsafe for living. Despite the fact, the tenants demand a larger habitable carpet area. This was unviable for the Developers and left a meagre incentive for them. Hence many old structures had been pending for redevelopment.

Due to increase in FSI up to 3, the redevelopment spree is expected to transform the face of the realty sector.

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AWAIT EASE IN NORMS FOR
“DAMNED CONVEYANCE”

The Government of Maharashtra is now keen on revitalizing the norms of existing law on Deemed Conveyances to give relief to thousands of flat owners in old housing societies who are eager to complete the formality of conveyance before opting for redevelopment.

The Government has expressed its serious concern over the issue of unsold flats apart from taking stern action against the builders for non-execution of Conveyance Deeds in favour of housing societies. However, while the final decision is at initial stage, the eagerness of the Government to consider these issues is at advanced stage.

It is stated that there are about 23,500 housing societies in the city. It is a matter of regret that of these, out of 903 housing societies that had applied, only 549 were issued the conveyance instrument. After 2012, 398 housing societies had applied of which, only 87 have been given conveyance so far.

The incongruity and unease in the Law of Conveyance proves beyond doubt that the contributing flat owners and housing societies were facing hardship in completing the required formalities. It is feared that the scant response towards much enthused scheme is bound to continue if the Government did not relax the existing norms of Deemed Conveyance. It is alleged that the Developers are being asked to pay bribes under their nose to Government Officers of Revenue Dept. to record updates in Property Card.

The flat owners and housing societies are not able to afford to pay and hence, are reluctant to go with the scheme. Owners of the dilapidated flats are in constant fear that once they move out in search of alternate accommodation, they will lose the ownership of their land forever. It is demand that the title of the land is passed to the Government in cases of dilapidated and dangerous buildings seeking conveyance while going for redevelopment.

A view is being spread that why for obtaining Deemed Conveyance Certificate, documents like Building Plans, Commencement Certificate, Occupation Certificate, Completion Certificate, property cards, would be required to be furnished by the housing society when it is already registered and paying various taxes to the BMC/Government?.

Such a view is in contradiction to the letter and spirit of amended provisions. Unless a promoter has given, the housing society cannot be compelled to produce such requirements. Such additional requirements may be propagated so that non availability of such documents can lead to unreasonable demands from the corrupt officials involved in granting of Deemed Conveyance.

And this legal fiction of Deemed Conveyance has further more proved to be wholly without proper understanding as it is not the end of the journey. Subsection 5 takes the process at the doorstep of the Sub-Registrar or the concerned appropriate Registration Officer who is again required to hear the Builder to show cause why the unilateral instrument should not be registered as Deemed Conveyance and after once again giving a reasonable opportunity of being heard the said final authority may, on being satisfied that it was a fit case for unilateral conveyance, register that instrument as ‘Deemed Conveyance’.

It ex-facie appears that the relevant bill was drafted in the Office of the Builders! It is heavily tilted to only safeguard their interest at any cost and at all costs! They are to be heard by the Competent Authority, thereafter by the Sub-Registrar or any appropriate Registrar and again a hearing to the Promoter (builder) finally!
Hearing the builders at every stage, reasonable opportunity of being heard leaves a lot of scope and gap of opportunity to challenge the final order by crying that no opportunity of hearing was granted. Unfortunately our Courts are ever ready to entertain such grievances even at the drop of the hat to quash and set aside such order even after long drawn battle for Deemed Conveyance.

Our system will not allow this concept of Deemed Conveyance to reap the fruits for the end consumer as the Promoters have a very strong lobby at every stage to throttle the cooperative housing movement even with the help bureaucracy and the ruling politicians. In addition to 5 subsections of S.11 of the Act there are 13 Rules and 6 forms for the purpose of achievement of dream of the Deemed Conveyance to be followed by the societies desirous of getting this order of registration of Deemed Conveyance.

It is also decided that the State Government will issue a circular, asking officials not to insist on an Occupation Certificate (OC) for giving Deemed Conveyance.

Though OC is not mandatory for issuing Deemed Conveyance to cooperative housing societies, complaints of its insistence by officials from the registrar's office have come to light though the laws have made it clear that OCs are not compulsory for Deemed Conveyance. At least 2,200 housing societies in Mumbai do not have OCs. The State Government circular, once enforced, will facilitate transfer of property rights in such housing societies.

There is, however, a catch. After the deemed conveyance, it will become the housing society's responsibility to obtain the OC from the BMC. The Civic Body withholds the OC for a building if a developer has not met all conditions stipulated during the building approval process. Following the Deemed Conveyance, it will be the housing society's responsibility to meet these conditions, while the developer will continue to remain culpable. Housing Industry sources also said the society might not be able to discharge the responsibility in cases where the Occupation Certificate has been withheld due to irregular construction.

It is an intense appeal to let us have Deemed Conveyance genuinely and not deceptively!

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MOFA 1963 MOVES OUT, REAL ESTATE REGULATORY BILL MOVES IN......

The Indian Real Estate sector is considered to be the most corrupt sector. This sector was largely unregulated and opaque, with consumers often unable to procure complete information or enforce accountability against Developers in absence of effective regulation. This sector has also emerged as a source of black money and corruption over the past years. 

The Union Cabinet on Tuesday, 4^th June, 2013 cleared the much awaited Real Estate (Regulation and Development) Bill which aims at organising and monitoring the Realty Sector in India. Once enacted, it is claimed to protect the buyers from scheming developers and shepherd transparency in the Realty Sector which had been unregulated till now.

The Government will bring the Real Estate (Regulation and Development) Bill in the next session of Parliament. The Municipalities and the Development Authorities shall have to pass the map on the basis of carpet area and this would be a mandatory requirement and any other criteria apart from that like the super built-up area or the built-up area and others would not be recognized.

In other words, it provides for a clear definition of 'carpet area' and would prohibit private developers from selling houses or flats on the basis of the ambiguous 'super area' which are deceptively and dishonestly loaded to any extent.

It also has provisions under which all relevant clearances for Real Estate Projects would have to be submitted to the Regulator and also displayed on a website before starting the construction.

Many in the Realty Sector have opposed the Bill in its current form. It has proposed stringent penalties and even a jail term for a maximum of three years for Developers convicted of malpractice. In the making for about five years, the Bill seeks to make it mandatory for Developers to launch projects only after acquiring all the statutory clearances from the relevant authorities.

Within a year of the Act coming into place, Real Estate Regulatory Authorities will have to be constituted by the Government of each State and Union Territory. More than one authority in a state is permissible. At the central level, a Real Estate Appellate Tribunal has been proposed.

There are provisions to deter the Developers from issuing misleading advertisements on projects to cheat the gullible and innocent buyers. A first-time breach would attract a penalty which could be up to 10 per cent of the Project Cost. A repeat offence could land the Developer in jail for up to three years.

It also aims to make it mandatory for a Developer to set aside half the money collected from buyers to a separate Bank Account for every project and to ensure money raised for a particular task is not diverted.

Developers think that in its zeal to put curbs on a small section of Developers, the Government is punishing the whole Real Estate Industry. If Real Estate Industry does not prosper, how can customers benefit. If construction stops, it will make housing further costly and how will it be made affordable.

The bill incorporates “Punitive Measures” which include de-registration of the project and penalties in case of contravention or breach of the provisions of the bill. The proposed Real Estate Regulator, or a Real Estate Appellate Tribunal, will be empowered to impose such punitive measures in case a Developer defaults on any of the deliverables promised by them while selling a residential unit or a project.

The Developer shall be made more accountable for default to disclose project details such as layout, plan of development works, carpet area, the number of apartments booked and the status of the statutory approvals received by them. The Developer will have to disclose names and addresses of Real Estate Agents, Contractors, Architects, and Structural Engineers to bring greater transparency to all realty projects and maintain absolute clarity in buyers’ interests.

A major constituent of the Real Estate (Regulation and Development) Bill is to create a mechanism that will ensure speedy ruling of disputes through adjudicating officers who will be appointed by the Real Estate Authority. This will ensure that property buyers can quickly seek justice in case Developers try to cheat them or deny those services they had promised earlier while selling a real estate project.

The Real Estate (Regulation and Development) Bill also mandates that 70% of the sales from a project be committed only to the completion of that project and the money is not diverted to other projects as many Developers do. The sell proceeds will be deposited in a separate account to be maintained in a Scheduled Bank within a period of 15 days of its realisation.

The said Bill shall ensure that Real Estate Agents are banned from selling housing projects that are not registered with the Real Estate Authority. They will now be obligated to maintain and preserve Books of Accounts, Records and Documents and will also have to give an undertaking that they will not be involved in any unfair practice. They will also have an obligation to facilitate the possession of documents to allottees as entitled at the time of booking and to comply with such other functions as specified.

IN NUTSHELL:

1. Developers can launch projects only after getting all relevant clearances.

2. Developers cannot offer any pre-launch sales without the regulatory approvals.

3. Authorities have 15 days to approve or reject a project.

4. Construction to begin only after the Developer's website has displayed all details of the project including receipt of clearances.

5. The buyers are entitled to full refund with interest in case of delay in projects.

6. Realty Developers will have to maintain a separate bank account for every project to ensure funds raised for one project is not diverted.

7. It will be mandatory to keep 70% of the buyers’ funds in a separate Bank Account to ensure timely completion of relevant projects.

8. Developers cannot take more than 10% of the advance from buyers without a written agreement.

9. Developers will have to use photographs of actual site for advertisements purpose. Failure to do so will attract a penalty which may be up to 10 percent of the project cost.

10. Repeated felony from wrongdoers may land in jail.

11. To repeal MOFA 1963, from the appointed day (Sec.56).

AMBIGUITIES

1. The said Bill makes it mandatory to declare the time frame of the project. However, it does not insist to declare a particular time frame; the freedom rests with the Developer who has to adhere to it throughout the construction process till it is completed.

2. The said Bill does not insist that the conveyance must be done within a stipulated period once the Society is formed but like many other rules, this time-frame is mostly neglected and then misused. The proposed Bill should reaffirm or establish a new time-frame within which the conveyance must be done by the developer.

3. The said Bill does not ensure that only one agreement is made for the entire transaction along with amenities etc.

4. The said Bill expects every Developer to declare the carpet area of the flat but does not specifically restrict them from adding up other areas into it. The developer has already charged a high rate for those extra amenities and common facilities. Therefore, charging for them in the form of additional area should be stopped on an all India level.  

5. The said Bill is only focusing on the housing aspect. They are ignoring the fact that many people are buying commercial properties. There is no reference to commercial segment in the said bill.

6. The said Bill is silent over the mode of payment. While making payments, the buyer pays part of the payment in cash and part of the payment in cheque. It is advantageous to both the parties in the sense that the seller shows less income while filing for Income Tax and the buyer pays a lesser amount as Stamp Duty which entails a loss to the Government. This practice is responsible for the generation of black money in the economy.

7. Developers often escape through loopholes in the Sale Agreements. There is no provision of any specific Draft of Sale Agreement in the said Bill unlike MOFA, 1963 in which, a Draft of Sale Agreement was given with a precise provision of initiating a criminal proceeding under Indian Penal Code for cheating, breach of trust and unfair trade practice.

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