“SELF-REDEVELOPMENT: A NEW BEGINNING FOR

OLD SOCIETIES IN MAHARASHTRA”

Submitted tο:

Mr. Soaham Bajpai

Assistant Professor οf Law

Submitted by:

Gyana Pathak (Reg. No. : 16A062)

Shachi Kalani (Reg. No. : 16B144)

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 INDEX

Serial Number Particulars Page Number

1. Introduction 3-4

2. The Murky Past of 4

Redevelpoment

3. Mumbai Self-Redevelopment 5-6

Scheme, 2018

4. Constitutional status to 6-7

cooperatives

5. Advantages of Self- 7
Redevelopment

6 Limitations of Self- 8-9

Redevelopment

7. Recommendations 9

6. Conclusion 10

7. Bibliography 11

ABSTRACT

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In majority cities of developing countries, old buildings always choose to undergo
redevelopment. There are one or more than one reasons for this. Such as buildings which are
in dilapidated condition or uneconomic to repair or tenants are in a need of more usable
floor area. This activity of building redevelopment is much visible in Mumbai city for past
decade and half. Because of various constraints and considerations, this process of projects
of building redevelopment is quite complex. It takes considerable efforts and time to
accomplish the projects. If a proper and time bound process is not followed, or if the risks,
uncertainties and challenges are not handled properly, even a seemingly simple project can
fail, thereby causing great anguish and hardship to the stakeholders. Sometimes this may
lead to prolonged litigation. There is a need to identify risks and challenges involved in the
process of building redevelopment projects. The aim of this research paper is to display the
views of all the stakeholders of building development projects of housing societies and
identify various risks and challenges visa-a-vis gains. The paper also discusses about the
pitfalls and uncertainties related to these projects. This will enable concerned stakeholders
to prepare to address these.

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 INTRODUCTION

Redevelopment is a fact of life in any ageing, land-starved metropolitan city. In India, no city
defines this dynamic quite as accurately as Mumbai. The conventional norm of re-
development in India involves appointing developers to redevelop old and dilapidated
housing projects, i.e., it is the process wherein a society seeks the aid of a real estate
developer, who assumes the responsibility of razing the construction to ground and
reconstructing a new building.1
However, while this is an ideal scenario, redevelopment, despite being a popular method, has
posed its fair share of challenges to residences due to the high level of dependency on the
developer. Perhaps the greatest problem intrinsic to the idea of hiring a third party developer
is conflict of interests between the society and the developer, both of whom are looking to
maximise their own gains. Then there’s the problem of a lack of transparency, which stems
from the fact that many developers tend to keep their operations private, in order to protect
themselves and their knowledge from competitors. The self-redevelopment model eliminates
both these scenarios because the society is redeveloping itself and the developer is merely an
agent as opposed to a partner.
As part of self-redevelopment, society members take onus of the process, right from the
conception to the construction process by hiring architects, contractors and project
management consultants, with zero dependency on an external developer. This trend has been
gaining popularity amidst societies, especially in Mumbai where members have been seeking
help from banks in the form of substantial loans for its execution. The prime advantage of
this model is that the society has control over the entire project, which leads to its assured
completion.2
Self-Redevelopment is the process in which the society is in the driving seat of the entire
redevelopment process. In this case, the society committee is the developer. So, the
appointment of contractors, architects or project management consultants is at the discretion
of the housing society.3 Several housing societies in Mumbai are now contemplating self-
redevelopment instead of giving the work of development to a real estate developer because
of the inherent advantages it possess.

1
Anuj Puri, Self-Redevelopment- The Future of Mumbai Real Estate?, MONEYLIFE (Jan. 24, 2019),
https://www .moneylife.in/article/self-redevelopment-the-future-of-mumbai-real-estate/56182.html.
2
Pranay Goyal, Self Re-development : A New Beginning for Old Societies,FINANCIAL EXPRESS (Jan. 21, 2019),
https://www.financialexpress.com/money/self-redevelopment-a-new-beginning-for-old-societies/1450446/.
3
Bhavya Gupta, Self Redevelopment – Redefining redevelopment in Mumbai, http://blog.hdfcrealty.com (Oct.
25, 2018), http://blog.hdfcrealty.com/self-redevelopment-redefining-redevelopment-in-mumbai/.

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 THE MURKY PAST OF REDEVELOPMENT

The question is why go in for self-redevelopment when a developer with the right know-how
and resources can get it done much faster and more efficiently? The key reason is that in the
past, several housing societies who entrusted the redevelopment of their projects to builders
were left in the lurch.

The process of redevelopment has never been a bed of roses. In many cases, society members
were cheated by builders in a variety of aspects. In others, the builder ran out of capital and
left the whole undertaking in indefinite limbo. Meanwhile, the original owners incur huge
rental expenses in alternate accommodations and are generally at the mercy of an outside
party whose only objective is a massive profit margin. In the ongoing NBFC crisis and
generalized funding crunch, this danger is exceptionally high as the power that a developer
wields over a redevelopment project is considerable, and such power can be and has been
grossly misused in the past.4
Government of Maharashtra woke up from the slumber on 9 th Jan 2018 wherein it in order to
allow cooperative housing societies to undertake redevelopment of their building
themselves,5kicked-off the Mumbai Self Redevelopment Scheme, 2018.6

MUMBAI SELF-REDEVELOPMENT SCHEME, 2018

The government of Maharashtra launched the self-redevelopment scheme 2018 on January 9,

2018 wherein, to accelerate the self-redevelopment process, the Maharashtra Housing and
Area Development Authority (MHADA) is given the supervising authority for this scheme.
Under this scheme, MHADA has provided a single window system for all necessary
permissions for self-redevelopment of housing societies which will ensure that the requisite
permissions are given quicker and more promptly than it would otherwise take. 7 It has also
created a panel of architects, project management consultants and contractors to provide
choices to the housing society, to select the requisite professionals needed for self-
redevelopment.8
Further, as financing a real estate development is a crucial task, the Mumbai District Central
Cooperative Bank has been entrusted to facilitate redeployment by providing assistance as
well as loans on self-redevelopment of the buildings of the housing societies.9

4
Supra Note 1.
5
Balwant Jain, Mumbai’s self-redevelopment scheme 2018: how it works, HOUSING NEWS (9th Sept., 2018),
https://housing.com/news/mumbais-self-redevelopment-scheme-2018-works/amp/.
6
Akhilesh K Prasad, Mumbai’s Self Redevelopment Scheme 2018, RealtyMyths (Oct. 28, 2018), https://www.
realtymyths.com/mumbais-self-redevelopment-scheme/.
7
Supra Note 2.
8
Supra Note 5.
9
Supra Note 6.

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The scheme provides that the key things for society members to keep in mind for self-
redevelopment are that –

 The project needs to be registered under RERA, as there is an offer to sell an apartment
post redevelopment. So, all the rules and regulations of MahaRERA will prevail.
 Society should abide by all the regulations prescribed by the state in building
reconstruction process.
 It is mandatory that all the members of the society should have the consent for
redevelopment of the society.
 Society should not have any outstanding dues and all the members of the society should
have no pending maintenance.
 Atleast 15% of the project cost needs to be paid by the society. However, if the finance is
not available, then the society can obtain the required finance for Intimation of
Disapproval (IOD) from any financial institute.
 Any change in the by-laws of the housing society would require prior approval from the
bank.
 Apart from the 100% preservation of legal property rights with society and transparency
in redevelopment process, societies can earn from the sales of the additional flats. The
proceeds from the sale of the flat can be used to make society maintenance free and/or
develop amenities for its residents.
 Society committee would be the developer and have the power to take the decision
regarding the redevelopment, such as appointment of contractor, raising of loans, selling
of additional flats etc.10

 How to go about it
To execute a self-redevelopment project, the housing society must have conveyance in its
own name, i.e., the society must be the owner of the land. To get the project off the ground,
the housing society first needs to get consent from its members. It must convene a special
meeting with clear notices to all members and also to the local registrar’s office, which sends
a representative to conduct the meeting. While there is no law in place demanding 100%
consent from all members, most banks offering loans for self-redevelopment are making it
mandatory to get 100% written consent.
Once the members have consented, the society can hire a project management consultant.
The consultant can manage the entire process for the society, ie., it can get the feasibility
study done, hire and coordinate with contractors and engineers, get the needed approvals,
secure loans to arrange for the sale of unused flats and ensure timely execution of the project.
Essentially, the consultant can act as a one-point contact for the housing society, taking care
of all aspects until project completion and even beyond.11 Once self-development is
completed the society members can reap the benefits of the unused potential of the property.
CONSTITUTIONAL REFORMS IN COOPERATIVES:
Number of Housing Societies in Maharashtra (MAHACHS) (Miss) managed by the State
Government’s authorized Officers are far from few. In many housing societies either a tiny
group of reluctant members accept this responsibility or a few members with ulterior motives
10
Supra Note 3.
11
Sanket Dhanorkar, Should your housing society opt for self-redevelopment ?ECONOMIC TIMES (Jan. 28, 2019)
https://m.economictimes.com/wealth/real-estate/should-your-housing-society-opt-for-self-redevelopment/
amp_articleshow/67691125.cms.

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grab it somehow. In any case the reason is the same; indifferent mind-set of the membership
towards community responsibility. There is a long overdue need for every member to change
his outlook to willingly join a well meaning group working in the common interest of a
community who came together voluntarily. In MAHA-CHS challenge of undertaking Self
Redevelopment of the property is neither too ambitious nor too far off in time frame. Stories
of miss-deeds of redevelopers are increasing day by day and have become nightmares for
many societies. Unfortunately it is not realized yet that now it is not too difficult to take up
Self Redevelopment in self managed housing societies adhering to the cooperative principles
and values. Believe it; a good time is definitely ahead for MAHA-CHS which are already
self-managed. The growing number of membership bidding farewell to the apathy towards
management responsibility will increase the number of self managed housing societies
manifold. It is certainly being realized that Self Redevelopment is practically unavoidable. In
fact with real estate sector behaving the way, redevelopment by housing societies themselves
is in reckoning seriously. It is otherwise also far too attractive to resist. It is with this
optimism we assess and foresee the upcoming very rational management scenario in MAHA
housing societies. A very promising mega event in cooperative history of over a century was
conferring the Constitutional status to cooperatives under the historical noncontroversial
enactment namely: the Constitution (97th Amendment) Act 2011 (97CAA).Very recently this
was followed up by Maharashtra State, though in a small way, by promulgating the
Maharashtra Cooperative Societies (Third Amendment) Ordinance, 2018 (Housing Society
Ordinance). Some signs of the MAHA-CHS membership abandoning its indifference towards
management responsibility enthused by the positive State initiatives are visible. Some
housing societies are reportedly seeking to manage Self Redevelopment of their properties by
themselves without engaging a redeveloper. Recent example is of the 220- member Sachin
Cooperative Housing Society in MulundEast in Mumbai. It is going to be the first of its kind
as it is reportedly planning to redevelop the property without displacing the residents-a
formidable challenge.

ADVANTAGES OF SELF-REDEVELOPMENT

Following are some of the advantages of self-redevelopment –

 Builders find redevelopment projects attractive as there is a huge potential for profits

from selling the extra inventory, left after allocating units to original members. The
builder gets to pocket the entire gains from the saleable area. However, under a self-
redevelopment project, any surplus accrued from the sale of additional inventory is
entirely retained by the society, to be distributed equally among its members. The
major advantage of self-redevelopment is that society members reap the benefits of
the unused potential of the property rather than the builder.12

 Also, because of the elimination of stake dilution of builders, the homes they get via
self-redevelopment are also invariably much bigger than what they could hope for if a
builder does it. The actual floor space owned by each resident is likely to go up
fourfold in many housing societies. Builders are said to have been promising only a
twofold increase after redevelopment.

12
Supra Note 11.

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  The homeowners have complete control over the quality of construction, the
completion timeline, and enjoy more corpus funds because they retain the right to sell
surplus homes generated in the redevelopment process.

 Since amenities are decided by members, they are expected to be more utilitarian and
all property rights remain with the society as no power of attorney needs to be
executed in favour of the developer. Also, this scheme is very advantageous for
smaller buildings that builders do not find viable to take up.13

 Societies reserve the choice to appoint project management consultants, architects and
contractors to execute the project and even new members are selected by existing
ones. Further, there is a provision of single-window clearance of permissions from
MHADA and an easy loan processing from MDCCB.14

LIMITATIONS OF SELF-REDEVELOPMENT

Following are some of the limitations of self-redevelopment -

 Despite the many benefits of self-redevelopment, it goes without saying that it

presents a huge challenge to people who have no expertise in any area of
development. From applying for funds to finding the right contractors, and from
monitoring the entire process to the fair division of the resulting properties, self-
redevelopment is a huge uphill and complex undertaking especially for the people
who lack the core expertise and have other jobs and businesses to maintain.15

 Currently, the trend witnessed so far indicate that most societies coming forward for
self-redevelopment are smaller, with less than 50 units each. This is largely because it
is easier to get full consent from all stakeholders if the number of stakeholders is
relatively small. As the numbers of stakeholders go up, so does the number of
potential change-averse dissidents who want things to remain the way they are.
Unfortunately, banks offering loans for self-redevelopment make it mandatory to get
100% written consent from all involved stakeholders for the project to commence.16

 While society members are expected to contribute 15% of the required funds for
redevelopment, the remaining 85% may be provided by MDCCB in the form of a loan
with a cap of Rs. 50 crores. The project will, therefore, need to be completed strictly
within the planned budget, which may not always be sufficient.

13
Supra Note 1.
14
Akhilesh K Prasad, Mumbai’s Self Redevelopment Scheme 2018, RealtyMyths (Oct. 28, 2018), https://www.
realtymyths.com/mumbais-self-redevelopment-scheme/.
15
Anuj Puri, Self-Redevelopment- The Future of Mumbai Real Estate?, MONEYLIFE (Jan. 24, 2019),
https://www .moneylife.in/article/self-redevelopment-the-future-of-mumbai-real-estate/56182.html.
16
Sanket Dhanorkar, Should your housing society opt for self-redevelopment ?ECONOMIC TIMES (Jan. 28, 2019)
https://m.economictimes.com/wealth/real-estate/should-your-housing-society-opt-for-self-redevelopment/
amp_articleshow/67691125.cms.

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  Several documents are required for approval of a project. While the approval may be
through a single-window system, updating and putting together the required
documents is cumbersome in itself.

 Multiple experts play a role in the redevelopment process and the onus is on the
society members to coordinate between these experts as any lack of coordination may
hamper the project. It is also the responsibility of the society members to ensure that
construction norms and standards prescribed by the government are adhered to.17

RECOMMENDATIONS:

In view of to give incentive to all registered co-operative housing societies on the

government/semi government/private land in the State for making self re-development of
their buildings, the high power committee form in this regard has made following
recommendations
1) Eligibility for making self re-development – Those structures in the co-operative
housing societies in the State which are 30 years or progressively old that structures are
qualified for the self re-development.
2) One Window Scheme – Different sorts of consents are required from government/semi
government scheme for the self-redevelopment of the co-operative housing societies in
the State. For getting every one of these consents, follow up is made independently to the
different divisions, subsequently additional time expended for the said procedure. In the
event that the said consents are get in the endorsed period and in one office, at that point,
the procedure of the re-development become quick and the concerned plan is finished
before. In this manner for getting different authorizations for the self re-development of
the co-operative housing societies in the State at one spot, one window plan ought to be
begun.
3) Time limit for giving sanction to the Scheme – It should be made compulsory to
complete all permissions with the help of one window scheme within 6 months from the
date of receiving the proposal of the self re-development scheme of the co-operative
housing societies.
4) Floor Space Index/incentive space – Those Co-operative Housing Societies who are
beyond 30 years old in the State, who will adopt the self re-development, to such
societies, 10% more floor space than the floor space index/incentive space due for the
redevelopment as per the concerned Local Development Control Rules and shall be made
admissible. Likewise, if the Rehab Area for the residents in those buildings is more than
the admissible F.S.I then in such situation, 10% more F.S.I should be made admissible
than the Rehab Area. Similarly, in respect of the buildings on 4 the road having less than
9.00 meter width, these buildings should be given 0.4 FSI without premium instead of
the present due 0.2 FSI (with premium).
5) Those co-operative societies who are wishing to do collective self re-development, for
them by loosening up the state of having two streets, the authorization for re-
development of the structures on the 9.00 meter wide street in the crowded zone and the
structures on street of 12.00 meter wide in the less crowded region ought to be given.
Additionally, the concerned co-usable ought to be made accessible the fundamental land
required for turning out to be 9.00 meter wide street and as needs be the concession
ought to be given in that extent in the Front Margin of the structure.
17
Akhilesh K Prasad, Mumbai’s Self Redevelopment Scheme 2018, RealtyMyths (Oct. 28, 2018), https://www.
realtymyths.com/mumbais-self-redevelopment-scheme/.

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 CONCLUSION

It can be concluded that self-development is the need of the hour. However, as the process of
redevelopment is long term and cumbersome, societies needs to act with prudence and care
all through the process. They should be aware about the laws of the redevelopment
thoroughly. Rental and mobilization compensation should be decided fairly and objectively.
As the project is RERA registered, compliance and timely delivery of the flats would be
necessary to avoid any fines.18
A sufficient number of stakeholders must be proactively be involved in several activities until
the completion of the project. From getting the requisite approvals from the concerned
authorities to getting all paperwork done to getting no-objection certificates, society members
have to do it themselves. Getting consensus for every detail from all members of the society
is very important, and the likelihood decreases as the size of the project increases. Success on
this front depends on excellent communication between all society members and should, if
possible, involve a steady stream of professionally crafted communications as well as expert
in-person presentations to outline all the benefits. In other words, successful self-
redevelopment calls for an exceptionally high level of co-operation and dedication among all
stakeholders.19

However, being a ‘Do it Yourself’ sort of a model that housing societies across the country
are still familiarising themselves with, issues such as delays, funds’ mismanagement,
changing plans, and keeping a tab of changing government norms among others are
challenges commonly faced by the societies. For this reason, a more holistic, risk-free and
reliable approach is needed that guides societies that are looking for self-redevelopment. 20
Therefore, depending on the right government policies and sufficient success antecedents, the
trend of self-redevelopment can become a bigger market force reaping benefits for the society
members. 

18
Supra Note 3.
19
Supra Note 1.
20
Supra Note 2.

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 BIBLIOGRAPHY

 Akhilesh K Prasad, Mumbai’s Self Redevelopment Scheme 2018, RealtyMyths (Oct.

28, 2018), https://www. realtymyths.com/mumbais-self-redevelopment-scheme/.
 Sanket Dhanorkar, Should your housing society opt for self-redevelopment ?
ECONOMIC TIMES (Jan. 28, 2019) https://m.economictimes.com/wealth/real-
estate/should-your-housing-society-opt-for-self-redevelopment/
amp_articleshow/67691125.cms.
 Anuj Puri, Self-Redevelopment- The Future of Mumbai Real Estate?, MONEYLIFE
(Jan. 24, 2019), https://www .moneylife.in/article/self-redevelopment-the-future-of-
mumbai-real-estate/56182.html.
 Balwant Jain, Mumbai’s self-redevelopment scheme 2018: how it works, HOUSING
NEWS (9th Sept., 2018), https://housing.com/news/mumbais-self-redevelopment-
scheme-2018-works/amp/.
 Bhavya Gupta, Self Redevelopment – Redefining redevelopment in Mumbai,
http://blog.hdfcrealty.com (Oct. 25, 2018), http://blog.hdfcrealty.com/self-
redevelopment-redefining-redevelopment-in-mumbai/.
 Pranay Goyal, Self Re-development : A New Beginning for Old Societies,FINANCIAL
EXPRESS (Jan. 21, 2019), https://www.financialexpress.com/money/self-
redevelopment-a-new-beginning-for-old-societies/1450446/.

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