Housing society residents get building redeveloped without a developer

Housing society residents get building redeveloped without a developer
11/12/2018 , by , in News/Views

In a tiny lane called Naik Wadi in Goregaon (E), the skeleton of a new tower is almost ready. As construction workers hung around on a recent balmy Friday afternoon, Ajit Thakur, secretary of Ajitkumar Cooperative Housing Society, said, “Eight floors are complete and only the final slab remains. The building should be ready for occupation next year.”

What makes this redevelopment so unique is that the entire project – from conception to construction- has been executed by the society members themselves without a builder.

Profits from such self-redevelopment schemes, now slowly gathering pace in Mumbai despite the obstacles, will come to the residents instead of the developer.

The successful redevelopment of Ajitkumar Society shows that such projects can be pushed through by residents themselves. “We have already sold 75% of the free sale flats,” Thakur says.

The new tower will have 26 flats, of which 14 are for sale and the remaining will be for members.

The society appointed an architect to draw up plans and procure permissions from the BMC, and hired different labour contractors for piling work, RCC construction, plumbing, electrical wiring, interiors and fabrication.

The redevelopment bug bit the 12 flat owners of this society six years ago when they realized the high recurring cost of repairing their 1969-built three-storey building. “But no builder was interested because our plot is small and they did not see any profit in it,” says Sailesh Gala, a society resident and building material supplier.

They then decided to redevelop the property themselves. “We collected Rs 5 lakh from each member to prepare the design, and appointed architect Vijay Garodia,” says Gala. The project kicked off, thanks to a Rs 8 crore loan sanctioned by Mumbai Co-operative Bank. “Currently, it is the only bank which funds self-redevelopment projects,” says Thakur.

In the new tower, each member will get 25% additional space. Those who lived in 400 sqft flats will get 500 sqft each while those occupying 600 sqft space will be entitled to 800 sqft in the redeveloped property. Ten of the 14 flats in the free sale portion were sold at market rate of between Rs 20,000 and Rs 24,000 a sq ft.

But there is a hitch now. The society has been slapped with a Rs 25 lakh property tax bill for land under-construction. This was completely unexpected, say residents. The society has appealed to the BMC to reduce the amount.

As reported by media earlier, many housing societies are now considering self-redevelopment. In fact, the housing authority, Mhada, has formed a special redevelopment cell to assist housing societies keen to go it alone.

Builder Nayan Shah, who has redeveloped many housing society properties in the city, says self-redevelopment must be pushed by the government. “In the 1960s and 70s, this was the only way buildings were constructed without the involvement of developers. People would come together, form a society and buy plots from the government. It was not complicated at all then,” says Shah.

However, he cautions that regulations are much more complicated and civic compliances are high. “Those in the construction line are hounded at every step. The government must frame a policy for the entire state to encourage self-redevelopment,” he adds.

Sanjay Devnani, a developer with projects in the suburbs, says he started a company offering development management services to housing societies interested in self-redevelopment. “The society and its members earn the profit instead of the builder,” he says. However, Devnani adds that the biggest stumbling block currently is when banks ask for personal guarantees from each member of the society. “The moment this condition is put, societies back out. No resident can afford to give personal guarantee,” he says.

Anuj Puri, chairman of Anarock Property Consultants, says in the current market scenario, many builders have been cash-starved for several years, resulting in stalled re-development projects. “Considering this state of affairs which has resulted in many ‘redevelopment specialist’ builders losing credibility, more and more housing societies are now contemplating self-redevelopment in cities like Mumbai,” he says. But Puri adds that most societies coming forward for self-redevelopment are small in size, with less than 50 units each. “Only experienced and well-capitalised builders have the expertise and the calibre to redevelop large societies,” he says.

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