State Housing Department Relaxes Rules for the Redevelopment of Cessed Buildings in Mumbai.

The state housing department provides relaxed conditions for the redevelopment of old and decayed cessed buildings in the city with hundreds of Mhada NOCs stuck for over a year.

It has removed a 2019 GR which, several developers have said, was unworkable. Now developers would not be expected in order to obtain a redevelopment NOC to deposit large amounts in escrow accounts. They just have to deposit 10% in a nationalized bank in the form of a bank guarantee or fixed deposit at the ready reckoner rate of the total construction site proposed.

On 8 March the State Housing Department dismissed a controversial Government Resolution (GR), passed in September 2019 that stopped the redevelopment of these structures and issued new rules on redeveloping ceased buildings that are governed by Mhada.

Several developers pointed out that the redevelopment of the Mhada buildings had halted since the old GR set some impractical conditions for builders to reconstruct them. One of these was that any constructor who wanted to rebuild an abandoned building would have had Rs 10-50 crore turnover in three years. Another condition was that 500 houses were built by the builder to be eligible for redevelopment in a cessed building.

“If the property owner develops the property or the housing society himself then no previous experience in the construction must be demonstrated. If the owner is a developer, then some standards of previous development experience will exist. This is also applicable if the owners or landlords sign a redevelopment agreement with the builder,” said an official.

Redevelopment of dilapidated cessed buildings were stalled by 2019 GR. The new rules are an inviting move. While redevelopment conditions are relaxed, a timebound plan for redevelopment needs to be in place. Mhada must ensure that residents’ complaints are resolved promptly and that developers are penalized for postponing delays post issuing of NOCs. In parallel, Mhada must strictly regulate and monitor construction quality.

Mumbadevi Congress MLA, Amin Patel, said it was a good decision to break the GR and to issue new guidelines. “The redevelopment standards must be relaxed and builders must be concessionary in the light of the Covid-19 pandemic,” said Patel.

Officials of Mhada have said that the city has about 14,000 cessed buildings, many of which need to be redeveloped urgently. A cessed building pays a cess or tax which constitutes a repair fund. They belong to private property owners and are regulated under the Bombay Rent Control Act. Most of the structures go from the pre-independence era in South and Central Mumbai.