Impact Of New Maharashtra Housing Policy On Residential Market In Mumbai

The recently released Maharashtra Government Housing Policy proposes the redevelopment of buildings in 104 layouts of the State-run Maharashtra Housing and Area Development Authority (MHADA) in Greater Mumbai. A developer will be eligible for an FSI (Floor Space Index) of three for the redevelopment of a plot up to 2,000 square metres and can get an additional FSI of one by paying a premium and sharing the housing stock with the MHADA. The redevelopment of plots beyond 2,000 square metres will get an FSI of 4. How will the new policy impact the Mumbai residential market?

- Ramesh Nair

The Maharashtra Government expects at least 30,000 houses to become available with the implementation of a new policy on MHADA lots in Greater Mumbai, and proposes the redevelopment of old or dilapidated buildings in the suburbs. This will be carried out under a cluster scheme, currently applicable only to the Island City of Mumbai. At least 10,000 old or dilapidated buildings from the suburbs are expected to get a makeover.

In addition, the policy gives a thumbs-up to the redevelopment of 40 MHADA transit camps housing over 22,000 tenants across Mumbai. It also states that the Government is looking at rehabilitating over 50,000 slum dwellers on Mumbai Airport-owned land.

THE SUPPLY PERSPECTIVE

Will housing supply actually increase? It may. Probably for the first time, the Government has given a true incentive to developers to look seriously at redevelopment in the suburbs. Since the area offered for redevelopment includes MHADA lots and not simply buildings, the fragment areas included in these lots provide an incentive to developers to look keenly at redevelopment. The development of single buildings has not been too attractive to developers, as the trouble of tenant relocation, legal hassles with eviction and lengthy approval processes often exceeds the financial returns.