FSI for all categories of Cessed Buildings increased to 3.00

A decision kept on hold since 2009, the state government on 26^th July 2013 announced that a floor space index (FSI) of three will be extended to all the three categories of cessed buildings (Category A, B and C). The move would certainly make it attractive for builders and developers to offer redevelopment to more than 16,000 cessed buildings.

The move is expected to provide a major boost to plans of redevelopment of such properties.

What are Cessed Buildings?

Cessed buildings - built prior to 1969 - are privately-owned old buildings in South Mumbai whose repair and maintenance are the responsibility of the Maharashtra Housing and Area Development Authority (MHADA). The tenants in these buildings pay a certain cess to the MHADA as owners have found it impossible to maintain the buildings because of low rent income.

Buildings which were constructed before 1940 are categorized as category A cessed building, Buildings built between 1940 to 1950 are categorized as Category B Buildings, and Buildings built between 1950 to 1969 are Category C buildings.

The Bombay High Court has ruled that cessed buildings in the city can be demolished and redeveloped with additional Floor Space Index (FSI) only if can be allowed only if the MHADA certifies the building as 'dilapidated'.

With this categorization Over 12,768 buildings which were constructed before 1940 are categorized as category A cessed building, about 1169 buildings built between 1940 to 1950 are categorized as Category B Buildings, and about 1058 buildings built between 1950 to 1969 are Category C buildings.

Existing Regulation on Redevelopment of Cessed Buildings

Section 33(7) of the Development Control Rules for Mumbai (DCR) lays out that if a cessed building is redeveloped, the developer can get maximum FSI of 2.5 or the FSI required to provide tenements to all the tenants in the building, whichever is more, plus some incentive FSI. The developer then rehabilitates all the tenants in the old building, and sells the extra FSI for his/her profit.

1. In case of redevelopment of 'A' category cessed buildings undertaken by the landlord or Cooperative Housing societies of landlord or occupiers, the total FSI shall be 2.5 of the gross plot area, or the FSI required for rehabilitation of existing occupiers plus 50% incentive FSI, whichever is higher. Under the new policy the developer is assured of at least 50% FSI for free sale. Also the policy enables rehabilitation of all occupants on the same plot, reducing social dislocation. 

2. Self contained flats of minimum 300 sq.ft. (As per Govt. G.R. dt. 2-3-2009, minimum carpet area admissible is 300 sq. ft. in lieu of 225 sq. ft before amendment) and maximum 753 sq.ft. carpet area are given to the old residential tenants/occupants. Shopkeepers are given an area equivalent to their old area. 

3. In case of 'B' category cessed buildings permissible FSI shall be the FSI required for rehabilitation of existing occupiers plus 50% incentive FSI.

3. As per the permissible FSI, stated above, will depend upon the number of occupiers and the actual area occupied by them, no new tenancy created after 13.06.1996 shall be taken into account, while computing the permissible FSI. Similarly, tenants in unauthorized constructions made in the cessed buildings shall not be taken into account while computing permissible FSI, i.e. the total no. of tenants/occupants should not increase after 13.06.1996. The responsibility for rehousing such tenants whose tenancy may have been created after 13.06.96 or who stay in unauthorized construction will lie solely with the NOC holder.

5. Though some buildings may belong to 'C' category (may not belong to 'A' or B' categories), they may be so dilapidated and dangerous that their reconstruction is most urgently necessary to this end, the Government has granted additional incentive FSI as per Point No.1 above for redevelopment of buildings of any category declared as dangerous, prior to monsoon of 1997.

What would change?

After the move to increase FSI for category A cessed buildings to 3.0 times, the state government on 26^th July 2013 announced that a floor space index (FSI) of three will be extended to B and C category buildings (constructed prior to September 30, 1969). Clubbing buildings that were earlier classified as category A, B and C, the state announced on that it would give floor space index (FSI) of 3 to all cessed buildings to boost redevelopment activity in the city.

Chief Minister Prithviraj Chavan, replying to a debate on the issue in the state legislative assembly, said that all categories of cessed buildings will now have an FSI of three.

Developers never paid attention to B and C cessed buildings as only A category buildings used to get that FSI. Many buildings which used to be neglected by developers for want of incentives can now go in for redevelopment.

       

In addition to the above, Fungible FSI of 35% at premium is also applicable to Cessed buildings Redevelopment. The GoM had amended the DCR to enable the tenants to get minimum 300 sq. ft and maximum 753.50 sq ft area flats post redevelopment. As per the modified DCR, the tenants will also be eligible to get further additional area upto 35% as fungible FSI applicable to all sizes of flat. The FSI can be utilized either to provide flower bed, dry balcony, nitch areas or voids or may be used for constructing bigger habitable areas.

Expected impact of the changed regulation

The amendment would benefit more than 16000 families, a majority of lower middle class who live in hazardously wrecked structures mostly in the southern areas of Mumbai. Also Category B, and C buildings which were till now neglected by builders for lack of sufficient commercial incentive would find increased interest for redevelopment. For several years, builders have been reluctant to undertake redevelopment of these buildings as the plots on which they are constructed are small and it was difficult to redevelop with an FSI of 2.5. As a result, residents continued to languish in old structures with the constant fear of the buildings collapsing.

The highest benefit of the amendment has the potential to benefit thickly populated areas of Bhendi Bazaar, Girgaon, Kalbadevi, Grant Road, Tardeo, Byculla, Dadar, Parel, Matunga, Sion, Also some of the Cessed buildings in Bhendi Bazar, Sandurst Road, Grant Road, and Byculla are identified under the category of cluster development and hence, builders are likely to bag FSI of more than 3.0 times Developers have welcomed the move, saying that it will have a major impact. “The hike was needed and it will really bolster the creation of affordable homes in the city,” said Sunil Mantri, chairman, Indian Merchants Chambers (real estate committee).

While housing activists are also happy with the decision, they want the government to look beyond just hiking FSI. “The state should beef up the corresponding infrastructure as only hike in FSI will not serve any purpose, apart from putting a strain on existing resources,” said Utsal Karani, secretary, Janhit Manch.

According to Shadaab Patel chairman and managing director of Platinum Constructions Private Limited, the recent announcement was much awaited move. “There would be creation of more housing stock, which could also result in some price correction,” he said.

However, builders want more such proactive steps.

“The next move should be single-window permissions so that approvals are processed faster,” said Sunil Mantri vice president of the National Real Estate Development Council.

Sources: The Times of India (27^th July ’13), Hindustan times (27^th July ’13), MHADA Website, MCGM Website.

Money Matters renamed as Capri Global

Move was made after both companies entered a strategic tie-up

Non-banking financial services firm Money Matters has been renamed as Capri Global Capital following both the companies entering into a strategic tie-up and has appointed Qunitin E. Primo III, as Non-Executive Chairman on its board.

Qunitin E. Primo III is currently Chairman and Chief Executive Officer of Chicago based Capri Capital Partners LLC (CCP), which is a $3.4 billion fund in real estate and structured equity investments.

“With Quintin coming on board, we plan to aggressively expand our operations and launch new products including expansion of lending portfolio to MSME segments as a part of diversification strategy with special focus on priority sectors,” said CCCL – India’s Managing Director PH Ravikumar while adding that the company plans to deploy around 1900 crore rupees under MSME & priority sector lending by the end of 2016-17.

In 2010 controversy surrounded Money Matters as its then chief executive was arrested by Central Bureau of Investigation (CBI) on the allegation that the company has bribed or attempted to bribe bankers to get loans for many companies.

Source: http://www.business-standard.com/article/companies/money-matters-renamed-as-capri-global-113080900781_1.html