Relaxation in premium payments, additional development rights and reduction in interest rates on delays in premium payments, are some of the new incentives being provided to builders by the Brihanmumbai Municipal Corporation (BMC) in an effort to activate the redevelopment of small old houses on its leased lands.
Under this new policy, which has been in the works for a long time, several dilapidated buildings under BMC limits which are over 50 years old, will get a fresh lease of life. Earlier, developers were not keen to redevelop these old cess properties because it was not financially viable for them.
According to the old policy, the builders had to construct 325sq ft sized flats, irrespective of the earlier flat size. Most of these houses owned by the BMC and given out on long-term leases were tiny ranging between 225 and 300 square feet (sq ft). And, hence, developers would be stuck with inadequate floor space index (FSI) and unable to sell the flats.
However, this new policy, which was cleared in a meeting of the BMC’s Improvement Committee on Thursday, is all set to offer a string of benefits to attract developers.
According to the Chairman of the Improvement Committee, Sadanand Parab, this new policy will benefit hundreds of their old small houses, as their redevelopment had been stalled for many years. “With incentives, developers will come forward for their redevelopment,” he said, Indian Express reported.
However, Congress corporator and a member of the Improvement Committee, Ashraf Azami, welcoming BMC’s decision to speed up the redevelopment process, has suggested that all proposals under this policy should be first whetted and approved by the Improvement Committee.
The details of the incentives dangled before developers include: firstly, builders are being offered a sizable 50 to 70 % additional incentive areas on redevelopment. Secondly, they can also now pay their premiums through an extended period of five installments. Earlier, the premium was paid in two installments — 50 % with the grant of the commencement certificate and the other half after obtaining the occupation certificate.
The policy has also lowered interest rates in case of delay in premium payment from 18 % to anywhere between 8.5% and 12%. The deadline for redevelopment has also been extended to between five years and seven years depending on the plot size. Earlier, they had to complete the redevelopment in three years.