What is micro-zoning? Maharashtra’s new initiative to address disparities in Mumbai’s RR rates

Rather than applying a one-size-fits-all rate for an entire area, micro-zoning will help in creating zones that reflect the local conditions, leading to fairer pricing for residents and property owners.(Courtesy: PTI file photo)

The Maharashtra government has decided to introduce micro-zoning of areas in Mumbai to establish ready reckoner (RR) rates. A meeting with all Mumbai MLAs has been scheduled for April 16 to develop a preliminary plan for the initiative.

The move comes amid concerns over the disparities in RR rates, especially in areas undergoing rapid redevelopment.

What is micro-zoning?

Micro-zoning refers to the process of subdividing a larger area into smaller, more detailed zones, each with specific uses or purposes. In this context, it is used to decide the property rates with greater precision, revising the pricing to the economic realities of the area.

Rather than applying a one-size-fits-all rate for an entire area, micro-zoning will help in creating zones that reflect the local conditions, leading to fairer pricing for residents and property owners.

For example, in a neighbourhood where both slums and luxury high-rises exist side by side, micro-zoning will ensure that the low-end properties, such as slums or redeveloped chawls, do not pay the same ready reckoner rates as the high-end apartments.

What are RR rates?

The ready reckoner (RR) rates represent the government’s estimated guideline rates for properties in different cities. Each state, city, and even neighbourhoods within cities have their own specific rates. The authorities consider various factors to determine the real estate cost in a particular area.

Using these factors, a benchmark is set, and no real estate transaction in that specific area is allowed below this benchmark, known as the ready reckoner rate. Stamp duty and registration costs are imposed by the government based on these guideline rates exclusively.

Why is there a need for micro-zoning?

The need for micro-zoning in Mumbai arose due to disparities in the city's RR rates, where properties in slums, chawls, and redeveloped slum areas were paying the same rates as plush, high-end high rises.

It was brought to the government’s notice that in certain areas like the Four Seasons hotel in Worli, and parts of Parel, Borivali, Malad and Malvani, where slums, chawls and smaller buildings have been replaced by high rises, the low-end flat owners were paying the same rates as high-end flats.

This disparity led to unfair pricing for smaller flat owners, who ended up paying disproportionately high stamp duty relative to the actual value of their homes.

State government's response

During a meeting with MLAs, Revenue Minister Chandrashekhar Bawankule declared that micro-zoning would be introduced, with the help of geographic information systems (GIS), to calculate RR rates based on local conditions.

Additionally, Bawankule mentioned that many builders had been taking advantage of the current system by paying development charges at outdated RR rates, especially in areas where slums and chawls were redeveloped into high-rise buildings.

“We will go in for micro zoning with the help of the geographic information system (GIS) for the scientific computation of RR rates. It has also come to notice that many builders have been misusing the RR rates by paying development charges and premiums at the old rates even in flats redeveloped from slums and chawls, which naturally attract a higher rate. Micro zoning will help the government to fix such anomalies and plug the losses,” Hindustan Times quoted an official from revenue department as saying.

The government will begin drafting a detailed plan that will address these issues and introduce micro-zoning effectively after the meeting of all Mumbai MLAs on April 16.