What To Keep In Mind If You Are Heading For Redevelopment
Limited availability of land parcels has been paving the way for redevelopment of housing projects. Though the trend was prevalent in cities like Mumbai for a long time, metropolises like Delhi, NCR and Bengaluru are the new additions to the cities undertaking redevelopment of projects on a planned level.
Redevelopment of any residential or commercial structure is a profitable concept which promises a win-win situation for both the developers and property owners. Redevelopment is a necessary process in the construction business, particularly, when considering the safety of a building as any structure has an inbuilt shelf-life, at the end of which it tends to turn unsafe and unappealing for buyers.
So, if you are a buyer or an investor, looking to invest in a redeveloped housing project, here are some guidelines for a hassle-free deal.
What is redevelopment?
Housing redevelopment is the process of reconstruction of a residential premise by the demolition of the existing structure and construction of a new one as per approvals from the municipal corporation of that city.
When is a property suitable for redevelopment?
Any residential or commercial building which is older than 25 years is eligible to undergo redevelopment once it is declared dilapidated by an architect. Redevelopment of a housing society can only take place when 75 per cent of the owners agree to the task.
Things to know about redevelopment of housing projects
Given the extent of malpractices happening in this area, it is advisable for the society members to appoint a lawyer before signing a contract with the builder. The most appropriate method to select a builder is through tendering process. The members should agree to vacate only after the developer has secured necessary legal approvals and permits for redevelopment as well as when agreement has been registered.
The developer is responsible for giving a security deposit to the society members. The amount must be equal to the entire redevelopment cost.
The developer is responsible for giving a bank guarantee of at least 20 per cent of the project cost.
Transfer of development rights (TDR)
Members of the society need to ensure that the developer purchases the additional TDR and loads it on the society. They should confirm this before vacating their house since if the TDR rules change after vacating, the builder might not be able to give the extra flat area he had promised.
The developer is liable to provide alternate accommodation for the society inhabitants, preferably in the same area. Or, should at least agree to advance payments for a year for the member's monthly rent. The members are also entitled to seek cost of shifting from the developer.
A society planning to undertake redevelopment must possess registration certificate, an original building plan, a lease deed/sale deed, a copy of resolution, an agreement and a title certificate. Property card and an NA (non-agricultural) order are additional requirements for the process. The society's name must appear in the property card maintained by City Survey Office as the owner or the subsisting lessee. Else, the society would not be eligible to go for redevelopment as Municipal Corporation will not permit demolition of existing structure and reconstruction.