Redevelopment

Redevelopment means demolishing an old building (usually 30+ years old or structurally weak) and constructing a new one on the same plot. Housing Society redevelopment (especially in Mumbai and across Maharashtra) is a structured but often misunderstood process. Here’s a complete, but in short explanation about the process involved and practical breakdown—from concept to execution—with the key legal, financial, and operational details you’ll need.

  1. What are Benefits of Society Redevelopment?
  • Larger flats for existing members
  • Modern amenities (lifts, parking, security, clubhouse, etc.)
  • Additional sale flats (which fund the project)
  1. When Should a Society Consider Redevelopment?
  • Building is structurally unsafe (Structural Audit Report)
  • High maintenance / repair costs
  • Outdated layout (no lift, no parking)
  • Members want bigger homes
  • Land has unused FSI/TDR potential
  1. Legal Framework  & Key regulations: (Maharashtra Focus)
  • Maharashtra Co-operative Societies Act, 1960
  • Redevelopment Guidelines (GR dated 3 Jan 2009 + amendments)
  • MOFA (Maharashtra Ownership Flats Act)
  • RERA (Real Estate Regulation Act) – Developer must register project
  • Local Development Control Regulations (DCPR 2034 in Mumbai effective from 2018)
  1. Step-by-Step Redevelopment Process

Step 4.1: Society Resolution

  • Minimum 1/4th members request redevelopment
  • Managing Committee calls Special General Body Meeting (SGM)
  • Resolution passed with majority approval (typically >51%)

Step 4.2: Appointment of PMC (Project Management Consultant)

  • Independent expert (architect + legal + financial)
  • Helps with:
    • Feasibility report
    • Tendering
    • Developer selection
    • Agreement structuring

Step 4.3: Feasibility Study

PMC evaluates:

  • Plot size and zoning
  • FSI potential (base + fungible + TDR)
  • Expected carpet area per member
  • Financial viability

Step 4.4: Tendering Process

  • Transparent bidding
  • Multiple developers invited
  • Comparison based on:
    • Corpus fund
    • Additional area offered
    • Rent + deposit
    • Track record

Step 4.5: Developer Selection

  • Must be approved in SGM
  • Usually requires 70%+ member consent (practically necessary)
  • Selection criteria:
    • Financial strength
    • Past projects
    • Delivery record

Step 4.6: Agreement Execution

Key documents:

  • Development Agreement (DA)
  • Individual Permanent Alternate Accommodation Agreement (PAAA)
  • Power of Attorney (limited)
  1. What Members Typically Get

(A) Additional Area

  • 20% to 50% increase in carpet area (depends on FSI)

(B) Corpus Fund

  • Lump sum paid by developer
  • Used by members or society

(C) Rent During Construction

  • Monthly rent OR transit accommodation
  • Plus shifting charges

(D) New Flat Features

  • Modern layout
  • Better infrastructure
  • Parking (often one per flat)
  1. Financial Structure (How Developer Profits)

Developer earns by:

  • Selling extra flats created using FSI/TDR
  • Premium pricing due to new building

Costs include:

  • Construction
  • Rent to members
  • Corpus
  • Premiums (to government)
  • Approval costs
  1. Critical Clauses to Watch (Very Important)

Time Period

  • Usually 2–3 years
  • Include penalty for delay

Bank Guarantee

  • 10–20% of project cost
  • Protects society if developer defaults

Rent Escalation Clause

  • 10–15% increase every year

Carpet Area Definition

  • Must be clearly defined as per RERA

Amenities List

  • Clearly specified (no vague promises)
  1. Common Risks / Problems
  • Developer delays project
  • Members disagreement / litigation
  • Poor agreement drafting
  • Hidden FSI assumptions
  • Financial instability of developer

Mitigation:

  • Strong PMC
  • Legal due diligence
  • RERA compliance
  • Bank guarantee
  1. Timeline (Realistic)

Stage

Time

Initial discussions

3–6 months

Developer selection

6–9 months

Approvals

9–18 months

Construction

24–36 months

Total: ~4–6 years

  1. Self-Redevelopment (Alternative Model)

Society acts as developer:

  • Higher profit for members
  • Full control

But requires:

  • Strong financial backing
  • Project management capability
  • Loan arrangements
  1. Key Documents Checklist
  • Society conveyance deed / land title
  • Approved plans
  • Member list
  • Structural audit report
  • Tender documents
  • Development Agreement
  • Individual member agreements
  1. Practical Advice (From Industry Perspective)
  • Never skip PMC — this is where most societies go wrong
  • Don’t select developer only on highest offer
  • Verify past 3 completed projects of developer
  • Ensure corpus and rent are realistic (not inflated bait)
  • Get legal vetting from independent lawyer (not developer’s)
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