Friday, January 16, 2015

A new transfer of development rights (TDR) policy

Article In Times Of India

Mumbai: A new transfer of development rights (TDR) policy cleared by chief minister Devendra Fadnavis has unnerved Mumbai's builders because it will restrict the height of buildings on narrow roads in the suburbs.

The policy, aimed at reducing the burden on civic infrastructure, links all construction to the width of the road on which a plot stands. In a nutshell, narrower the road, lesser will be the floor space index (FSI); wider the road, bigger the construction right given to a developer through TDR.

Developers complained the new rules will make most redevelopment projects unviable. "If the modification is implemented in Mumbai, all redevelopment projects will be affected. More than 500 buildings are currently in process," said architect Manoj Daisaria.

Others say the step can curb unabated construction of tall buildings on narrow roads that pressure the crumbling civic infrastructure. Town planners and activists have for years complained about towers on narrow roads, especially in areas like Bandra, Khar and Santa Cruz because of TDR.

The state government is expected to issue a notification soon, inviting objections and suggestions.

TDR is a vital tool for builders because it allows them construction rights over and above the normal FSI that is currently permitted when they construct or redevelop buildings in suburban Mumbai. TDR is generated when the developer/owner surrenders land to the government and agrees to re-house slumdwellers or project-affected persons free of cost. In turn, a TDR certificate is issued that gives him additional construction rights in the suburbs, but only to the north of the plot he has surrendered.

On Monday, the construction industry was still uncertain on whether the proposed policy applied to Mumbai or not. While some said it did, others claimed it excluded the city. When contacted, the government's new urban development department secretary Nitin Kareer said: "I will have to check."

Government documents made available show that the FSI of 2 available to building projects on roads 9.15m wide could be reduced to 1.5.

For instance, on a 1,000sq m Bandra plot, a developer is today entitled to build 2,000sq m (FSI 2). Now the same plot can consume only 1,500sq m (FSI 1.5).

On a 13.4m road, the FSI has been reduced from 2 to 1.75. It means the total built-up area reduces from 2,000sq m to 1,750sq m on a 1,000sq m plot.

However, for redevelopment projects abutting roads 30m across or more, the FSI has been increased from 2 to 2.5.

Experts say about 40% to 45% of Mumbai's road are between 9.15m and 13.4m wide. "This will make redevelopment projects either un viable or drastically slash builders' profit margins,'' said a builder. More than 60% of plots in Bandra, Khar, Santa Cruz, and in town-planning schemes are next to roads of such width.

Industry sources said a builder executing a redevelopment project today can retain 35% to 40% of the total built-up area for free sale with FSI 2. With the new proposal, the sale component will fall by 25% to 30%. "This is not adequate to cover the cost of construction, cost of buying TDR from the market and other incidental costs. Moreover, a builder will not be able to offer additional space to existing owners in new flats. Today, the thumb rule is that 60% goes to existing occupants and 40% for free sale," one source said.

The plan to increase FSI for roads 30m wide or more will benefit projects abutting roads like LBS Marg, SV Road, JVLR, SCLR and E Moses Road. For example, a builder redeveloping a 1,000sq m plot currently can avail of 2,000sq m to build with FSI 2. Under the new rule, he will get 2,500sq m to build. But activists fear this will add more traffic on such roads and defeat the government's move to reduce congestion.

The government also wants to make TDR utilization universal in the suburbs. Today, TDR generated can be used only north of that plot. Now it is proposed to be used anywhere in the suburbs by charging a premium based on the ready reckoner rate.

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