Builders will get upto 35% of extra FSI, but will have to pay Premium for the same ~ Co-operative housing society in Mumbai, Thane, Navi-Mumbai, Pune Property, Co-op, Civil Consumer Law

CM Okays Civic Chief’s Plan.

The BMC & the Builders are the ultimate beneficiaries after the amendment in the Development Control (DC) Rules, 1991 – interprets Adv. R. P. Rathod.

The Chief Minister Shri. Prithviraj Chavan on Tuesday Okayed a path-breaking policy to streamline building approvals in the city and check the nexus between unscrupulous developers and Municipal Officials who sanction Building Plans.

In our earlier columns Now 35% Compensatory FSI likely for Mumbai City & A Proposal of BMC to amend Development Control (DC) Rules, 1991 is underway

We had explained about the policy proposal Formulated by Municipal Commissioner Subodh Kumar, the policy was to curtail his own discretionary powers to grant building concessions to developers. Most building files will now be approved at the Civic Executive Engineer’s Level and only in rare cases will they be put up before the Municipal Commissioner.

The new approved policy will levy a Heavy Premium on builders who want to build a little more than the permissible floor space index (FSI)—the ratio of the total built-up area vis-a-vis the plot size. The BMC hopes to earn around Rs 1,000 crore a year by charging this premium. The amended Policy will offer 35% Compensatory floor space index (FSI) for residential buildings and 20% for both Commercial and Industrial Structures.

Subodh Kumar is the first civic chief in over a decade who went out of his way to curb the discretionary powers vested in the Municipal Commissioner to sanction building concessions to developers. Earlier Municipal Commissioners liberally cleared projects with unusually large flower beds, voids, lily ponds and car decks. These areas are not included in the building’s FSI. These concessions allowed developers to build an additional 50% to 80% above the permitted builtup area.

The developer would sell these free spaces to buyers at market rate and then encourage them to illegally amalgamate these areas to make the apartment bigger. For instance, the flower bed area or a car deck is shown as part of the living room or bedroom by the builder.

The racket is rampant in the lucrative Bandra-Khar-Santa-Cruz-Juhu belt where maximum violations are believed to have taken place. Land prices are phenomenally high in this zone because land owners know that builders will make super profits by paying bribes to BMC officials and Local Politicians to procure maximum concessions for their projects.

Civic Officials said the misuse was so rampant that some builders could virtually double the size of the saleable area of an apartment by illegally merging these “free of FSI” spaces into the habitable area. The BMC detected that in some cases, while the actual size of the flat was just 1,500 sq ft, the terrace adjoining it could measure 3,000 sq ft. The builder would sell the apartment showing its size as 4,500 sq ft. Although rules restrict a flowerbed area to 1.2-1.5 meters, some civic commissioners had in the past allowed certain builders to construct up to 3 meters.

Now What this Rule Interprets, Common areas will soon be included in FSI Concessions. Currently, areas such as the lobby, lift, staircases, flower beds, ducts, balconies and lily ponds are not counted in a building's FSI. FSI is a development tool that lays down norms on how much you can construct on a plot. Although the lobby, staircase and such other elements are not included in the FSI, several builders sell the space by deeming these elements "Super Built-up" area.

Now after the amendment areas such as the Flower beds, voids, balconies and lily ponds will be counted in the Building's FSI. In lieu, builders will get compensatory FSI of 35% for houses and 20% for commercial structures. Further 25% extra parking will be allowed on premium but without counting it in FSI.

Under this new policy, Premium will be levied at rates 60%, 80% and 100% based on the ready reckoner(RR) rates for extra FSI in residential, industrial and commercial buildings respectively. However, premium will not be levied on rehab buildings. Developers rehousing tenants of cessed buildings in the island city or existing members of housing societies in the suburbs are exempted from paying a premium.

For End user, What is the Interpretation of all this says Adv. R. P. Rathod: Flower Bed, Balcony, Terrace, etc. are going to be included in FSI. Though all these steps are formulated to bring in transparency in the Realty Sector, the end results might be harsh on the end users, since these areas get included in FSI, the builder will pass on this to the end user & will start Legally charging for it & incidentally the property rates might hike or alternatively the space offered by the Builders might start to shrink says Adv. R. P. Rathod. The only difference is that post amendment the Govt. will now get their share in the "Super Built-up" area in form of additional revenue.

Adv. R. P. Rathod further adds that this amended Policy will mainly help the BMC to earn additional revenue by charging the Builders for areas they used to earlier utilize illegally & will break the nexus of Builders and Civic Officials who approve Building Plans just to a certain extent, the Consumer or the Flat buyer is nowhere in this Picture & will benefit nothing as explained above, on the contrary this policy will add burden on the end users. This logic is very clear explains Adv. R. P. Rathod, the Ground reality is that every Builder is already charging the Flat Buyers for all the Open Spaces, now out of this charges the builder will have to shell some amount to the BMC, which he can afford to do, but the Big question is where is the Consumer in this story and How & What will he benefit out of this Policy. The BMC & the Builders are the ultimate beneficiaries, as after paying the Premium the Builder will officially get additional FSI, no prices in guessing that this additional FSI will add his stock & will help him Build additional Flats, which he will sell as per the Market Rate.

Now it’s Official, that these proposals are sanction, enacted & enforced the property prices are set to rise further by atleast 10% to 15% and the next step will be that MCGM will start charging Property Tax for these areas also, as they are included in FSI, needless to say ultimately adding a burden on the end user concludes Adv. R. P. Rathod.