Self Redevelopment & Finance

Real Estate Sector in Mumbai

Mumbai the country’s Financial Capital of India is surrounded by sea and the availability of land is a big challenge. The demand for housing is growing continuously. Being the very old city, the old structures of the city have completed their useful life and pose a risk to the lives of the residents. In order to cater to the increased demand for housing, the old structures need to be replaced with as per current norms with increased Floor Space Index – FSI.

The government has been promoting and regulating the redevelopment of existing properties the improve the living standard of the public with enhanced amenities.

Why Self Redevelopment

Under self-redevelopment scheme, the existing home owners are the sole beneficiaries of the project and enjoy the benefits of increased FSI, participate in project planning, project layout, flat configuration and amenities as they want.

They receive additional free area, monthly rentals, shifting charges, brokerage and any other incidental charges as members decide. Members also get the project profit at the completion of the project and repayment of the bank loan.

Society appoints professionals like Architect, Chartered Accountant, Lawyer, PMC etc to guide it and to complete the project in time.

Today more and more cooperative housing societies are opting for self-redevelopment with help of their own seed funding and the bank loan.

Process of Self Redevelopment:

• Obtain the consent from the residents/members for self-redevelopment of society. For this, the societies must convene a Special General Body Meeting with clear notices to all members and to the local registrar, which then sends a representative to conduct the meeting. As per the new norms under Section 79A of the Maharashtra Cooperative Societies Act, 1960, reconstruction projects now require consent from only 51 percent of the apartment owners as opposed to 70 percent earlier. The willing members should sign the acknowledgement, and the copy of the same should be retained for future use.

• A structural report or feasibility report comprises existing building plan, consumed Floor Space Index (FSI), the carpet area of existing units, the revised TDR, fungible FSI, current development regulations and the cost break up for the execution of the project. The report provides technical and economic viability of the project.

• Societies should hire an architect for a technical report, a lawyer to complete the legal report and a chartered accountant for making a comprehensive financial viability report.

• The CA submits a detailed financial plan with complete projected cash flow statement with profitability statement, feasibility report, along with all other documents required by the bank as per its policy.

• The Bank scrutinises the complete file and after due assessment sanction the loan to the Society.

Having a team of experts, such as Architect, Chartered Accountant, Legal Advisor saves a lot of time and eliminates the scope of error. For instance, while a chartered accountant may assist in managing project details, compiling details as per bank’s requirement, overseeing cashflow, accounts, income tax, GST & RERA, a legal advisor checks legal compliances. An Architect will assist in making building plans, designs, government permissions & approvals. PMC will assist in finalizing a contractor, monitoring project.

We have successfully completed two projects under self-redevelopment one each with MDCC Bank and TDCC Bank i.e. in Mumbai and Thane.

The Mumbai project is situated in Vile Parle East where the cost of project is ₹ 229.54 Million and Bank loan is ₹ 120 Millions, financed by MDCC Bank. The project has been completed, OC received and bank loan paid in full.

The Thane project is situated in Manpada, Thane west, where the cost of project is ₹ 285.43 Million and Bank loan is ₹ 238.50 Millions, financed by TDCC Bank. The project work is in full swing.

We are well versed with all the norms, requirements of the banks. Our team comprises of Chartered Accountants, Architect, Civil Engineer, liasioning & Marketing professionals to handle and complete the project.

Our endeavour is to provide keys of the new flats to existing owners with a smile and new peace of mind for decades further.