Redevelopment is generally described as newborn construction

 By Nawaz Sayyed

In an exclusive talk with Mr. Ajit Kumar Jain Managing Director of Mishal Construction Group, he has shared his experience with us on society redevelopment.

1. What is need of redevelopment of housing societies and what is the benefit to the members of the housing society.

Redevelopment is generally described as newborn construction on an old plot which has pre existing structure in any housing society. It gives an opportunity to refurbish old residential complexes keeping pace with changing life styles and facilities to upgrade the standard of people who are living in old structures and also creates space for new people. Redevelopment is an hot issue today as vacant and un-encroached land Is hardly available in Mumbai city to carry out the further development of the residential/commercial properties. Today in Mumbai city many co-operative societies are in need of structural repairs as the structure of the societies is more than 40 years old and life of the said structure is expires and also society find it difficult to arrange the funds require to carry out the same. The growth in size of families and in the need of larger accommodations. The old housing societies are have other drawbacks also such as lack of securities, non availability of the play areas for children’s, lack of parking space, pertinent leakage problems, absence of elevators in the building which is a major drawback in societies specially for the old age citizens, resale value of flat due to poor condition of the existing buildings and unprivileged planning of rooms and many more. There are various advantages for those societies who opt for redevelopment of their existing properties in to new structure having grand entrance lobby, spacious staircase and lobby, modern elevators, adequate parking space as per norms, exclusive society office, gymnasium, health club, a 24 hours security, stand by generators for essential services, efficient fire fighting systems, under ground and over head tanks with submersible pumps, provisions for pipe gas connections etc.. For the existing members they will benefited with additional carpet area in the new building, the additional area and other benefits is depend upon the locality and the utilization of the FSI on said plot. Apart from the additional carpet area if any members wants additional carpet area over above their entitlement in the same building it can be achieved by purchasing from the developer at the negotiated cost as per the mutual agreed terms. This would enable families to live in the same locality, enjoying life with more luxury with an ultra modern amenities. On the other hand A major financial benefit of corpus funds to the society/member which take care of the revised maintenance cost in the new premises and rent for temporary accommodations till the possession is handed over in the newly constructed buildings. Redevelopment has made a very positive approach that has transformed many housing societies in metro cities in to a land mark complexes and towers.

2. If a housing soc. Wants to redevelop their soc. Then what is the procedure for redevelopment?

Redevelopment of housing societies is usually burdened with bitterness and complaints of high-handedness against the Managing Committee. Hence, with a view to ensure transparency in societies seeking to undertake redevelopment projects, the state co-operative department has, for the first time, issued guidelines for societies to follow under section 79 (A) of the Maharashtra Co-operatives act, 1960.

The special general body has to approve the bid of the successful bidder in a meeting attended by the registrar. The entire proceedings have to be video-recorded.

Stages of Redevelopment

Offer letter to the society: The Housing Society is required to inviting the tenders from the Developers and a Redevelopment Committee is formed to shortlist Developers on merits and the comparative data is placed before the SPGM for final selection. The selected Developer is informed accordingly and his terms are invited in writing as an Offer letter to the society.

Terms and conditions with the society: The first step towards the re-development is agreeing on the basic terms and conditions between the members and the Developer. The broad terms and conditions will include extra area, corpus money, shifting charges, alternate accommodation, time of re-development, amenities in the new building, etc.

Finalizing the plans with members: After due consultation with all the members, the plan will be made to suit the requirements of the existing members and will be approved by them before applying for sanction from MCGM

Agreement with the society: The execution of the development agreement will be done once the above two points have been cleared by both the parties and after the draft copy of the agreement have been approved by the solicitors of both the parties. It is possible to appoint a common solicitor so as to reduce the time in execution of the document

Sanction from MCGM in favour of the society: After the execution of the development agreement, plans are put up for sanction from MCGM with regards to the entire layout as well as the concession plans in favour of TWO FSI. This step makes the society feel safe and confident towards the Developer.

Obtaining the IOD: After concession approval is done by the municipal commissioner the IOD is obtained from the MCGM, the Developer then starts fulfilling all the conditions as mentioned in the IOD before obtaining the Commence Certificate.

Shifting of the members: The members will feel lot more confident after the IOD is been obtained from the MCGM. The members will now shift into their alternate accommodation as a pre-requisite before demolition of the building which is a must before obtaining the CC from MCGM

Demolition of the building: Once the members have shifted into their alternate accommodation, the demolition of the building will take place either all the wings simultaneously or phase wise depending upon the scheme of re-development. Usually about two months are given to the members from the date of obtaining IOD before asking them to shift to the alternate accommodation

Obtaining the CC: The IOD approval and demolition of the building will be followed by the issue of the CC (plinth level) by the MCGM which shall enable the Developer to start the construction work and after the plinth lines are verified by the MCGM officers, the further CC is granted for the complete building.

Construction of the building: The building construction work will began in full earnest as per the approved plans by the MCGM taking into consideration the various safety factors to be considered during the construction work. The quality and the amenities will be provided as per agreed terms and conditions.

Obtaining the OC: The last step before the construction work is termed as complete is obtaining the Occupation Certificate enabling the Developer to allot the occupation to the old as well as the new member

Shifting the old members: On receipt of the Occupancy Certificate the Developer can lawfully allow the possession of the flats to be taken over by their owners

3. Recently BMC has imposed “New Capital Value based Property tax System” What you think is it in favour of property owner?

The new capital value-based property tax system that comes into effect from April 2010 will impact more than two lakh self-occupied, leased and vacant properties in the city. The civic authority has extended the deadline for paying the taxes to June 30, following 35,000-odd complaints. The new system will increase tax by 100-300%, hurt the city's redevelopment market and even force many to move outside the city. The Property Owners' Association is now considering an option to move the court against the capital value-based property tax system. The association, which represents 2,700 property owners controlling more than 10,000 buildings in Mumbai, has been organizing joint meetings and seminars to alert members and marshal public support. According to the BMC proposal, property tax on residences will be calculated at 0.41% of its capital value. For offices, the tax will be at 1.95% of the capital value, and for banks, it's at 3.91%. The new tax will be calculated on the basis of the current market value or capital value of the property based on factors, like age, price, location, and type of property.

4.The MISHAL group is also concentrating in redevelopment segment, so now a day’s how many projects are under process and how many redevelopment projects group has done till date?

We are in construction industries since last 10 years especially into redevelopment of old properties and housing societies and to our credit we have delivered quality, Vastu compatible state of art landmark projects of various magnitudes across the city in Mumbai and also have a huge nos. of redevelopment project in hand under the various stages. Our dedicated team comprises of hard working dedicated people & thus we have successfully created and earned an excellent reputation in the field. Of the various major factors that has helped us create this unique position in the highly competitive housing sector, on time delivery, commitment fulfillment, positive attitude, quality & transparency has been our benchmark.

5. What is your view on RBI’s move for reduction in the repo rate by 25 basis points? 

''The RBI's decision to reduce the repo rate by 25 bps from 7.75 to 7.5% is good news for real estate industry. This is definitely going to provide some respite to the real estate industry. The reduction in the repo rate will definitely affect the consumers positively as reduction in repo rate will improve the liquidity in the market at some extent and will reduce the interest burden in the coming days.