Maharashtra revises development rules, boost for MHADA redevelopment, business districts

In a significant boost to the real-estate sector, the Maharashtra Urban Development ministry has amended the Unified Development Control and Promotion Regulations (Unified DCPR), allowing 5 percent amenity space for construction in plots larger than 20,000 sq m, increased Floor Space Index (FSI) for MHADA (Maharashtra Housing and Area Development Authority) redevelopment projects, and has granted additional FSI for commercial business districts (CBDs).

With this, there will now be an increase in FSI from 2.5 to 3 for MHADA redevelopment projects, and up to 5 FSI for expansion of CBDs.

The Unified DCPR, applicable throughout the state, except Mumbai city, was implemented in 2020 by the Uddhav Thackeray government to make development control regulations uniform across the state. It was aimed at eliminating ambiguity in rules and regulations and promoting consistent development.

However, due to the challenges posed by COVID-19 and its impact on the housing industry, Maharashtra Urban Development Minister Eknath Shinde had asked UD Principal Secretary Bhushan Gagrani and his team to carry out a comprehensive analysis of the regulations and improve them further.

Gagrani and his team met multiple stakeholders from the real-estate sector and proposed revisions to Section 37 (2) of the Unified DCPR, which were approved by Shinde.

According to Shinde, these amendments to the Unified DCPR will provide momentum to MHADA redevelopment and grow housing stocks while keeping prices under control.

The decision will accelerate the growth of commercial business zones as well as the real-estate industry and employment sectors. “The revised Unified DCPR will accelerate employment, promote economic progress and have a positive impact on the future of the industry,” said Shinde in a statement.

The real-estate sector is a key economic engine, and remains the second-largest employment sector after agriculture. More than 270 allied sectors like cement and steel are linked with the sector. The sector was hit hard by COVID-19, virtually evaporating housing demand.

In August 2020, the Uddhav Thackeray government slashed the stamp duty on property sales from 5 percent to 2 percent which re-ignited demand, and December 2020 witnessed the highest housing sales. The sales momentum continued till March 2021 before the second wave slowed it down again.

“The 5 percent amenity space in plots larger than 20,000 sq m pertains only to private layouts. The DP reservations for amenities like playgrounds, hospitals etc are separate. This will make the rules more uniform across cities like Pune, Thane, Nagpur and Aurangabad,” a senior Urban Development official said.

Real-estate body welcomes move

Dr Niranjan Hiranandani, President, National Real Estate Development Council (NAREDCO), said that the increased FSI for MHADA redevelopment will play a “positive role” in the redevelopment of MHADA colonies, one of the goals of UDCPR.

“Allowing up to 5 FSI for commercial business districts is a move which will result in more commercial real estate being constructed, which, in turn, will create more working space and thus, more jobs. This will result in the creation of more CBDs, which again, will augur well for not just real estate, but also the state’s economic growth. It will also allow economies of scale to positively impact viability of commercial projects,” Dr Niranjan Hiranandani, President, National Real Estate Development Council (NAREDCO), said.

He said the increase in FSI for MHADA redevelopment projects and CBDs would bring it on par with the Mumbai development rules.

“From an industry perspective, the expectation is that such moves should fit in with the overall scheme of things, and should not just be a piece-meal fix,” he said.

“The amendment regarding amenity space means that a developer need not keep aside amenity space if the land admeasures less than 20,000 sq m or 5 acres. For land admeasuring 20,000 sq m or more, 5 percent of the total area will have to be kept aside as amenity space. Effectively, this move will result in more constructed space for the project, the impact will largely be on overall viability of developing the layout. It needs to be pointed out that municipal regulations already provide for various development reservations such as playgrounds, school, hospital, fire stations etc. This decision is expected to positively benefit developers and home buyers,” he said

In December 2020, the state government had come out with an amendment to bulk FSI norms, which allowed for up to 30 percent residential uses in such CBD developments.