Redevelopment of properties of existing Co-operative Housing Societies has been a subject of great interest in recent years, both to the Societies and to the Builders. With the real estate prices touching a new high, residents in old buildings are now discovering that they have an opportunity to unlock immense value from their property by offering it to a Builder/Developer for redevelopment.
Redevelopment is the process of demolishing existing old society building and reconstructing it by appointing a good Builder who can construct and handover new flats to the Society members free of cost with some additional benefits and make profit by utilizing balance plot potential by constructing additional flats and shops as per approval from M.C.G.M.
Redevelopment has become quite popular in Co-operative Housing Societies since it is a most practical, economical and long term solution in a scenario where old structures are proving uneconomical or obsolete; whereas for the Builder it is a cost effective way to construct residential/commercial premises by utilizing the unused potential i.e. the Floor Space Index – Transferable Development Rights with gradual capital investment, in times of heavy land prices and in a situation of unavailability of land in good locations.
A Redevelopment arrangement begins with the conception of an idea to redevelop the old building and it ends with the handing over of the agreed constructed area in new building and the corpus money or other monetary consideration to the Society by the Builder. Builders on their part are also on the lookout for properties with unused development rights where they can build a new structure of a few storeys higher and sell those additional flats for a tidy profit for them.
Builders/Developers, who opt to purchase land and develop the same, incur huge stamp duty cost on transfer of land. However, when it comes to redevelopment of old buildings, the stamp duty is reduced by a significant extent and this acts as a major benefit for developers. Tenants also get several benefits like hassle free execution, extra carpet area, increase in flat’s value and in most cases, alternate accommodation/ reimbursement or rent compensation for the period the building is under construction.
However, there are many factors/questions that arise during the ongoing process of redevelopment and they are to be taken care of diligently while opting for Redevelopment. These factors by and large are the prompt implementation of Govt. Guidelines, Delay in possession of flats in redevelopment of Housing Society, Delivery of flats in time, Bumps, Bash and Bouncers from Builders, Busting of redevelopment projects of Housing Societies, Corrupt Members of Managing Committee, Faults, Facts and Fundamentals about redevelopment, Drafting of Development Agreement, Responsibility of Members of the Managing Committee in redevelopment, Letter of Consent to be furnished by a Member of the Housing Society, Corruption in redevelopment , Redevelopment and sand shortage, Recovery of dues from defaulting members, Selection of a good Builder, Unauthorized constructions by Builders and many more.