A LEVEL PLAYING FIELD, SAYS RAVI AHUJA
The Development Control Regulations (DCR) for Greater Mumbai, 1991, apply as a regulatory compulsion on building activities and development work in areas under the jurisdiction of Municipal Corporation of Greater Bombay. The Regulation came into force on March 25, 1991 which replaced the DC Rules for Greater Bombay framed under Maharashtra Regional and Town Planning Act, 1966.The regulations states (in simple terms) that every person who wishes to carry out development or re-development of a building or alter any building or part of a building is to give a notice to the Commissioner, along with plans and statements. Construction is to be carried out in conformity to the regulations.
Under the DCR, the Metropolitan Commissioner has been the final authority for interpretation of its provisions and his decision would be final. The Metropolitan Commissioner could use his discretion to condone provisions of these Regulations except the provisions related to FSI.
In January 2012, the Government of Maharashtra announced further amendments to the Development Control Rules (DCR) for Mumbai with the primary motive of bringing in transparency and reducing arbitrary and discretionary decision-making. The new rules would mean pricing based onmaximum available FSI, eliminating the ambiguity that was largely prevalent earlier with respect to disproportionate saleable area.
What changes have been made?
Under the new DCR, areas for balcony, flower-beds, terraces, voids, niches would be counted in the FSI. These were not earlier considered inFSI calculations.
To compensate for this loss in FSI, the government has allowed compensatory fungible FSI of up to 35% for residential developments and 20% for industrial and commercial developments. This can be used for bigger habitat area or flowerbeds, voids etc.
Fungible FSI will be available at 60%, 80% and 100% of the ready reckoner rates for residential, industrial and commercial developments respectively.
Under the new norms developers will have an option of 25% more parking over the DCR limit without premium and without being counted inFSI, which would bring some much needed relief to developers and end-users alike.
These rules would bring in transparency and curb corruption as they limit discretionary powers of authorities and provide a level playing field for all developers. Brihanmumbai Municipal Corporation (BMC) expects to earn upto Rs.1,000 crores a year, which would be used in infrastructure developments in Mumbai.
Will this bring down costs for home buyers?
Theoretically, the following results should be achieved as a result of these changes:
With the new rules, Mumbai will witness increase in net FSI at 1.79 in the island city and 2.7 in the suburbs, which should ideally bring down costs. The earlier practices where market prices reflected disproportionate
saleable area had resulted in an increase in cost.
The given FSI cap would bring cost rationalisation as developers would need to invest in quality design, maximising revenue by offering maximum value to end-users. However, in reality since no additional concessions are being given to commercial developments, the premium for additionalFSI would increase developer costs and reduce profit margins by upto 10-30%, if the incremental costs are not passed on to the buyers. The government has also issued a directive for 20% of apartments in all big projects to be distributed at construction cost to economically weaker sections.
In the immediate term developers may not resort to a price increase but be happy to cut down on the margins, as if they increase prices this would further aggravate the situation of already stagnated sales given interest rates are at peak levels.
Do the new rules apply to all buildings?
The new DCR rules do not apply to cessed, non-cessed old buildings, Mhada layouts, chawls and slums undergoing redevelopment. This would mean waiver of premium for buildings meant for rehabilitation. The compensatory floor space index (FSI) for the saleable component of these structures will, however, be governed by the new rules.
Ravi Ahuja, MRICS,
is Executive Director,
Cushman & Wakefield
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