Wednesday, May 15, 2019

Understanding Redevelopment!

“None of us knows what might happen even the next minute, yet still we go forward. Because we trust. Because we have Faith.” … Paulo Coelho.

The Noble prize winning writer actually needs no special introduction though many a doesn’t like much Paulo & thinks he is over rated writer yet his philosophy towards life can’t be neglected & I am admirer of him for sure! And recently when I have been called to speak at an event regarding redevelopment issues in Pune its Paulo’s above quote & used in my sharing with the audience. Well, first the key question what is redevelopment & what’s so significant about it as on that day nearly some 1500 plus people were present in the auditorium & at one stage people were sitting on stage & this does shows the grave concerns common man has about the topic & as usual "Mai Baap" Govt either can’t see this or prefers to turn a blind eye at it! So, redevelopment is demolishing the existing development (read building/structure) & building a new structure at the same place! Well, pretty simple to read isn’t it but mostly the simplest of the things on face are most complicated actually & when any such things are related to real estate in our beloved city Pune then take it granted & redevelopment too is not exception to this rule!

So, in nutshell redevelopment when used or referred in context of real estate then it’s demolishing the existing building where one or multiple owners are residing & then rebuilding a new building on the very land accommodating existing owners as well the new ones. Now, one will ask why in first place demolish the existing building? Well, there are many reasons for that & it’s the reason for demolishing existing building (read redevelopment) is the key to most of the problems or say issues involved in the process! For that lets see why the seminar has been called regarding redevelopment where people from hundreds of societies were present with equal numbers of questions (read problems). The organizers have sent me in advance few of the key issues raised by would be audience; just to get the seriousness of the subject I am mentioning some of them…

1.    For taking redevelopment of a society ahead how many resident’s permission (willingness) is must?
2.  ULC act has been abolished but still there are hurdles for redevelopment of societies build under ULC act provision, any light on it?
3.  If we enter in agreement of redevelopment with a builder, work started & what he left half way & ran away abandoning the project?
4.  Is it a must to have name of society on property card?
5.  How much more FSI for Metro route affected societies is there, what’s exact scene on that front?
6.  In existing society if balcony or terrace has been enclosed how this space will be considered while redevelopment?
7.  Is there any criterion about how much years’ minimum the society must be, for redevelopment?
8.  Where FSI is not balance, redevelopment is possible?
9.  In how many years the concerned developer must complete the project once redevelopment agreement is entered in?
10. Which documents are required for redevelopment?
    11. If the developer is finalized by the society members for redevelopment but the plans he has made are not accepted by few of the existing members, then what to do?

Well, above is tip of iceberg as there were many more & now you will realize the chaos among the common people (read society members) regarding their redevelopment & trust me, in many cases even the builders as well professionals are also clueless as above are very basic questions; there are more questions like GST on the transaction as well applicability of RERA etc! As I mentioned there were nearly thousand plus people in the hall & there were many developers also as apart from above sample questions even the developers also has questions for the experts! To start with take the most important issue i.e. TOD or Metro FSI (popularly known as 4 FSI); except the various news published in the new papers that too sources unknown, nobody is sure how much this Metro FSI will be given & where, to whom & at what rate. What will be utilization criteria, what charges one has to pay (read developer) to avail this FSI, then what will be parking norms as that’s another key question. And then will the TDR allowed on such plots if the developer has already got TDR or even if TDR is available at cheaper rate then why the society members or the developer has to still go for high rate Metro FSI in such case? See, just one aspect that is Metro FSI & there are hundreds of questions which even the PMC officers are unable to answer except telling “we have sent a proposal to govt (well, in govt too there are many govts’) & awaiting the reply” (read orders) was the answer! Oh yes there is one more confusion & its about giving TDR on 6 m wide road abutting buildings as no one knows what’s policy actually for this! If this is situation with the authorities like PMC who are supposed to have planning control of the city, how one can expect poor society members & poorer developers (poorer on the front of having any say in policy making) can answer any such question. And then there are more complicated issues like societies which has been developed under ULC act (when the act was in effect) but today when ULC act has been abolished yet the permissions are required from ULC (governed by UD as well Revenue dept) for redeveloping such societies & needless to say the game of pointing fingers to each other is on & no policy is clear to give any guide-lines for redevelopment future of such ULC affected societies. Well, a lay man like me will ask when you have build a structure on a plot may it be a surplus land then but today when people are legitimate owners of such homes & the ULC act itself is gone, why you need to treat these buildings separately! Answer is simple, here in this country nothing comes free, indeed there should not be free meals but one can’t expect to show claim on somebody else’s hard earned meal, right? Govt is supposedly coming up to allow ULC affected societies’ redevelopment by paying some 5% premium in tune with ready reckoner charges is the news but then here distance (read time) between a news & reality can be infinite, so till then all I can answer is wait!

Along with me there were numbers of experts, senior personalities from the field on dais, especially legal as well co-operative society’s apex body members & architects along with PMC officials! One major question which haunts most of the redevelopment pursuing societies is, how many members permission is essential for redevelopment? As per the law even 51% members permission is fine (read essential or legal) but then does this country goes by sheer law & in time, is the question I asked? Not just as a builder but even as a common man how you are going to vacate even if a single flat holder refuse to join redevelopment? Do mind we are in a country where we can’t vacate an illegal buildings residents & the legal battle goes on for years & here we are talking of vacating a legal resident by pulling him out of his legal home via legal battle; all the best, I can say! My answer was legally it may be 51% but ideally unless 100% members agrees to redevelopment it’s not wise to go for it & at least as a builder I won’t touch such proposal is a fact! Same is with the issue of some members not agreeing for the plans as unless all the members agrees on some plan, it’s not a bungalow we are speaking about where everyone can have his ideal plan, somewhere we all need to come on one common platform as then only redevelopment is possible! Then comes the question of members with areas (read spaces in possession) like enclosed balcony or top terrace or ground  level gardens (which are actually side or rear margins), & how they can be compensated for such areas in redevelopment? Again this is something a builder has no answer actually because if you are possessing illegal goods (in plain words “chori ka maal”) then just because you possess them doesn’t makes it legal & you are not going to get benefitted for it, is moral answer. But again this country doesn’t run anymore on morals & values, is a fact! So it’s up to the developer & other members of the society, how much they can shell from their share for such spaces as do mind no developer will be insane enough (well, actually there are many) who will be giving even one rupee from his pocket as for the developer it’s a combine deal after all. So whatever he will be offering to such members will eventually be reduced from the areas of all the other flat holders is a fact & nothing wrong in it, after all its for greater good or such members with illegal possession of terraces or garden won’t join redevelopment is a fact!

Then comes the million dollar question, what if the developers runs away half way, what status of the members (existing) in such case & what’s fate of such redevelopment project? Interesting, as there are many such projects around & answer can vary case by case as every failure has its own story. Though one common cause behind it is greed; it’s by both ends developers & even by the society members too! As do mind redevelopment is possible only in the areas where rates are decent (read nearly above Rs 10,000 & above per sft). Obviously the flats here are in demand & if the offer has been properly worked out & the money collected from the new flat bookings has been used only for the said project then no such project can ever goes in loss! And here is where greed factor comes in as I have specifically mentioned two things, one is has the offer been properly worked out, means the society members must not be too greedy to get the additional area such that whatever has been left for the developer should be enough for him to make some money by selling it & build the project. If it’s not so then no wonder he will ran out of money & the project will be abandoned. And another one is greed of the developer that he should not take out money & use it for some other purpose than to build the said project! So two things one must take in account make a viability report from some professional agency & demand the additional area fairly & second is join hands with a non greedy builder with a track record! Speak with his completed buildings project’s residents as well study keenly his balance sheet! Also ask for bank guaranty of 50% of construction cost or take collateral security of his that much amount in the form of clear title another property, preferably flats or shops! And yes “DO NOT SHIFT FROM YOUR HOUSE UNLESS YOU HAVE A COMPLETE FULL SANCTION PLAN IN HAND INCLUDING LOADING OF TDR/PAID FSI ETC”, is the single advise I shared with the audience. As maximum problems arises in the stalled projects because the members shifted from their homes without confirming that the entire plan has been sanctioned & then because change in rulers, policies regarding TDR loading to stop works because of any sudden change in DC rules (no construction near nallahs or near hill tops types) things happens here. As well alignments of adjoining roads gets changed overnight & this all may affect the further sanctions of the project so it’s best to get all the plans sanctioned & then only shift from the existing building & allow the developer to demolish the same!  And best way is make the builder part of your society team, as any redevelopment is not just society member’s or the builder’s type thing, it’s a joint venture actually & it will be successful only if both parties work as one team, trusting each other in true sense!

And then about the title of the society; do mind, even redevelopment it may be yet the society needs to be legal owner of the property & it’s not just because you are living there but the documents like property card, index-2 as well conveyance deed etc must say that you are owner or else no sane developer will touch the proposal. And it’s always wisdom to appoint professional person to verify all such details. But then most society people are always short sighted (short pocketed too) when it comes to spending on ground work things & leaves that to the developer who obviously will do it on his benefit only! 

Looking at all these questions & confusion, I feel it’s high time the local civic body must start a cell to guide people seeking redevelopment. As well even associations like CREDAI along with Media can take on this initiative!  Frankly every redevelopment is unique in its place & no thumb rule can be applied to it. Most important thing which nobody asked is what about the entire plan as well building’s maintenance type things, post possession. Because the more additional space the developer will be offering means he will bring in more numbers of flats as then only he can offer more space but your land is same, mind it! Today most of the redevelopment societies members are typical middle class elderly person & per month maintenance of such buildings is very less i.e. Rs 500 to Rs 1000 per month per unit maximum! But with all new construction, right from property tax to annual maintenance for things like lifts & generator & mechanized parking, the monthly maintenance can go to Rs 5000 & above. The new entrant can easily afford it as he is coming by paying crores of rupees but what about existing people? Has anybody ever thought about it? Same is about the open space & greenery around the buildings as you are redeveloping the building but land is not increasing in size. In many cases I have seen beautiful big grown trees were present in existing societies which were cut under the name of redevelopment but no provision is there for new trees & how much time it will take to make them grow again even if we plant the trees today! I just want to ask one question to every society member seeking redevelopment, why do you want redevelopment, just because you are getting few sq ft extra at free of cost or you want a better life than what you have right now! And then you all will be getting a new home along with new luxuries of the life with redevelopment of your home but who will be doing redevelopment of that big neem or jamun tree which has been growing along with you in that old society of yours & what about that tree’s resident like sparrows & parrots & squirrels, which doesn’t have a property card on their name, ask this to yourself & then only go ahead as that will be true redevelopment of the society & not just of the concrete structure, you call your home!

Sanjay Deshpande 
Sanjeevani Dev.

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