Mumbai builders to get construction cost for building affordable homes from MHADA
Mumbai For the first time, Mhada has offered to pay developers construction cost for building affordable houses. The proposal has, however, raised eyebrows as Mhada has been tweaking rules to favour builders. Earlier it was mandatory for builders redeveloping Mhada properties to hand over surplus flats free of cost to the agency. Mhada changed the rule and allowed builders to get away by paying a premium. And now, Mhada chief S Zende Patil has submitted a proposal to the government, stating that builders be sanctioned additional floor space index (FSI) if they build affordable houses, whose construction cost will be borne by the agency. The FSI (it defines how much can be built on a plot) for redeveloping Mhada colonies is currently 3. Mhada wants it to be raised to 4 so that builders can use the additional FSI to build affordable homes for which the agency is willing to pay for. As Mhada does not have any vacant land in Mumbai, the only way it can generate affordable housing stock is by making builders part with some portion of built area in redevelopment schemes. "The rules were amended to enable developers escape the responsibility of handing over affordable houses by paying a premium. Moreover, while the FSI has been increased by 33%, the benefit has not been transferred to citizens," said housing activist Chandrashekhar Prabhu. But builders said they are unlikely to bite this Mhada bait because there is nothing in it for them. Besides, Mhada has proposed to pay construction cost based on the state public works department (PWD) rates, which is lower than the market rate. "This business model will not work for any developer," said Amit Thacker, director of S D Corporation that is redeveloping a Mhada colony. "No builder will not want to work as a Mhada contractor. The housing authority should have given some sweetener to builders. It makes no business sense if a developer is to be paid at PWD rates," he added. Real estate analyst Pankaj Kapoor said, "Mhada owns the land, buildings and the FSI. Why should they invite builders to redevelop its properties?" He said that Mhada should redevelop colonies itself and reap the benefits, adding that once a builder steps in, the prices get escalated. "Mhada’s role is to compete with builders and fulfil its obligation of providing affordable homes. Instead, it is sitting with developers to make the property market inefficient," he said.