Your dream home may now cost less

MUMBAI Prospective flat-buyers have a good reason to put on hold their plans till early next year. And builders, who have so far been overcharging consumers on the basis of super built-up area, could be in for a rude shock. Residential property prices across cities in Maharashtra are likely to fall with the new housing policy proposing to make sale of flats only on the basis of carpet area.

Chief minister Vilasrao Deshmukh said the policy marked a “paradigm shift” in the housing industry sector in Mumbai and 45 other urban pockets in the state.

“This should bring down the cost of flats in Mumbai by at least 30% to 40% across localities. In areas where prices have gone through the roof, like South Mumbai and some suburbs, the reduction could be more than 30%. The measure would also have a softening effect on the realty prices in other urban centres of the state,” said a senior bureaucrat. The draft policy, cleared by the state cabinet on Wednesday, will take effect from January ’07.


Mr Deshmukh said, “the draft would be open to public suggestions and objections up to December 31, ’06. We plan to implement the new policy from January ’07.” The chief minister said the avowed objective of the policy is to make affordable and quality housing stock available for the “middle-income and low-income sections”.

“We have always considered slum-dwellers and there are schemes for their rehabilitation. This policy marks a major shift in the sense it seeks to address the housing needs of the economically weaker, middle and low income sections for the first time,” Mr Deshmukh said.

Mr Deshmukh also announced that his government would make a positive attempt to repeal the Urban Land Ceiling & Regulation Act (ULCRA) in the winter session of the state legislature beginning December 4 at Nagpur. “We have acquired more than 2,000 hectares across the state under the Act in past two years, including some 400 hectares in Mumbai alone. If this land gets unlocked, it would also bring down the property cost in Mumbai by 30% to 40%,” Mr Deshmukh said.

The policy offers incentives and options to achieve its stated goal of making affordable and quality housing stock available for the low and middle-income groups. Under a zoning provision, it proposes to make it mandatory on a developer who is developing a residential layout, say in South Mumbai, targeting the rich class, to also make small-size houses available for the middle and low-income people.

“The prices of such layouts are so exorbitant that a middle-class person is forced out of Mumbai. This has to be stopped,” Mr Deshmukh said. The state would also offer higher FSI for constructing houses for low-income class.

Appreciating the land crunch in Greater Mumbai, the policy allows movement of transfer of development rights (TDR) beyond the municipal limits in the semi-urban segments that fall under the Mumbai Metropolitan Region Area (MMRA). “For townships in the MMRA availing of this facility, the policy offers an FSI of 1 to encourage vertical development outside the municipal limits,” Mr Deshmukh said.

The government also wants to promote rental housing, which has become virtually unaffordable for the middle-income groups in Mumbai. “The policy will steer clear of the pending legal cases and making rental housing a much affordable option,” he said.

Housing officials said rationalisation of property tax, uniformity in development control rules, and streamlining of building approval rules would help the state achieve this goal.

The policy seeks to encourage competitive bidding for slum rehabilitation schemes with an emphasis on public-private partnership and FDI. “The state does not earn any revenue from the SRA schemes. We would like to change this and make these schemes viable for the state by making them competitive,” Mr Deshmukh said.

The Dharavi model, where the state has decided to go in for global tendering to award contract for redevelopment of the 217 hectare slum without any cost to the government and commercial incentives to the developer, would be applied to slums admeasuring more than 40 hectares, he said. The policy also seeks to create a dedicated housing infrastructure fund to which the MHADA would contribute Rs 25 crore per annum, the chief minister said.