All you need to know about self- redevelopment

Housing redevelopment refers to the process of reconstruction of a residential premise by demolition of the existing structure and construction of a new one as per approval from the appropriate Authority.

Traditionally this use to happen with help of developers, where they used to lookout for properties with unused development rights where they can build a new and higher structure where the additional storeys can be sold for profit. As per the terms of the agreement between the developer and the society, existing members of the society receive new flats in the reconstructed building of an area equal to or more than the area of their existing flats. Redevelopment can only take place if 75 percent of the members tender their consent.

What is the FSI?

In case the redevelopment is undertaken by the housing society, the society shall be entitled to an extra FSI of 10%, over and above what it is entitled to under the development regulations of the area. The percentage may vary with location.

What is Self Development?

If redevelopment is to be done through a developer, where the benefits of the additional floor space index (FSI) accruing to the building, do not go to the members of the society. But in recent years, many buildings that went for redevelopment have been abandoned midway by the builders, leaving the original flat owners stranded.

In order to ensure that the flat owners get the benefits of increased FSI and to let them have their say in the redevelopment of the building, the cabinet of the government of Maharashtra, set up an expert committee on March 8, 2019, to examine the issue and give recommendations for self-redevelopment of buildings by the housing societies in the state of Maharashtra. A Government Resolution (GR) dated September 13, 2019, was issued, to implement the suggestions of the committee.

What is the step-by-step procedure for self-redevelopment?

Step 1: Obtain permission from the society members

Getting consent from the residents / members of the society is the first step. This could be done when the society convenes a Special General Body Meeting of all members and the local registrar’s representative will conduct the meeting. As per Section 79A of the Maharashtra Cooperative Societies Act, 1960, 51% of the apartment owners should agree for the reconstruction project and sign the acknowledgement. A copy of this acknowledgment has to be retained, for future use.

Step 2: Get the feasibility study done

Once the acknowledgement is signed by more than half of the total residents, society needs to hire an architect, who will develop a feasibility report, which should contain the existing building plan, floor space index, size of existing units, TDR, fungible FSI and total cost involved in the project’s execution. The report will also list the possibility of any additional development as a sale component. It will be divided into three categories – technical, financial and other benefits of self-redevelopment.

Step 3: Document verification

To go ahead with the self-redevelopment, the society must have a conveyance deed in its name. If the land is owned by the state authority or the Maharashtra Housing and Area Development Authority (MHADA), then, a no-objection certificate has to be obtained from the owner.

Step 4: Bring experts on-board

You would need to hire a team of experts, such as a chartered accountant and a legal advisor. You need to maintain accounts, income tax and GST returns. A legal advisor will help you in compliances and RERA registration. You may also need to hire a contractor, who will take care of the construction. You will also need an architect, who will help you finalise the budget as well.

Step 5: Get approvals

The Maharashtra government has started a single-window clearance system, for self-redevelopment projects. There are almost 55-60 clearances required for such projects, including NOCs from coastal regulation zone, traffic, fire, defence, aviation and other authorities.

Step 6: Get the funds

The society can procure a loan from the any housing finance company/bank for the redevelopment project. For this, details of all society members, including Aadhaar card and PAN card have to be submitted to the bank. Along with this, agreements executed with architects, legal advisors and all other experts hired for the redevelopment project, will have to be submitted to the bank. There should be no pending dues under the name of society or any outstanding maintenance charges from the residents. Currently, the loan amount that can be sanctioned to societies under the self-redevelopment scheme, is capped at Rs 50 crores for seven years.

Step 7: Temporary arrangements

Once the funds are disbursed, you can start the construction work. However, temporary arrangements for the stay of the residents have to be made, until the project is complete. Once the architect gets the building plan sanctioned from the municipal corporation, the society has to pay the premium fee. The legal advisor will get the project registered under RERA, if any new sale units are being added in the project.


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