The state Cabinet’s recent move to amend the Maharashtra Regional Town Planning (MRTP) Act will facilitate more than 300 construction projects across the city, which have been pending with the civic body for the past three months.
The reason: The Brihanmumbai Municipal Corporation (BMC) had been forced to stop charging the premium that is traditionally used to in order to exempt common areas such as lifts, lobbies and staircases from being calculated in a building’s total Floor Space Index (FSI). For instance, in a residential project, the BMC would calculate only the carpet area of the flats and developers would pay a premium to build the common areas.
FSI is the ratio of permissible built-up area to the size of the plot it is built on and indicates how high a building can be constructed.
However, in its June ruling, the Bombay High Court had said that there was no provision in the MRTP Act that allows the BMC to charge a premium.
The BMC had then stopped collecting the premium and asked developers to include the common areas in their FSI, which limited how high a building could be constructed.
The amendment now makes it possible for the civic body to collect a premium and for developers to build more.
“It was almost a curfew situation for us in the last three months as the projects would not be viable without the exemption,” said Sunil Mantri, a builder and chairman of Maharashtra Chambers of Housing Industry, the apex body of the construction industry. “The amendment is a positive step and will spur construction activity.”
The amendment also permits the BMC to sell an additional 0.33 FSI to developers at a premium, and this too will help construction projects. Rajesh Vardhan, chairman and managing director, Vardhaman Builders, whose two projects in Goregaon were struck because of the verdict, said: “When we purchase FSI from the BMC, the money goes to improve the infrastructure, unlike in other cases where it is pocketed by private parties.”
Vardhan said Transfer of Development Rights (TDR) rates would drop in four months. “In Goregaon, it is expected to come down to Rs 1,800 to Rs 2,000 from the prevailing Rs 2,800 to Rs 3,000,” he said.
TDR is the compensation granted to owners who submit their plot of land for public infrastructure projects. It can be utilised to the north of the original plot. TDR certificates can be sold in the open market.
Real estate experts said the state’s move would help in the correction of property prices in the long-term. “There will be more houses so there will be scope for builders to reduce prices,” said Aditya Bansal, vice-president, Liasas Foras, a real estate research firm.