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Cluster redevelopment is considered the key to the well-organized development for Mumbai. The basic scheme of the cluster redevelopment means instead of redeveloping individual buildings, several old buildings are jointly taken up for the group redevelopment. A concept of cluster redevelopment had been mulled by Developers and was conveyed to the State Government.

The State Government accepted this idea and formulated a scheme by modifying the Development Control Rule (DCR) 33 (9) which enable a Developer to use an FSI of 4 to develop an area of a minimum of 4,000 sq. meters. The FSI of 4 is otherwise not available to Developers under DCR. However, this facility is extended only to legal buildings that are in most dilapidated and hazardous condition

Cluster redevelopment is to encourage the large scale redevelopment projects under DCR 33(9) deals with cluster development which in turn will also take care of other infrastructural aspects of planned road widening, sufficient parking, sewage treatment plant, rain water harvesting etc.

Cluster redevelopment means the Developer has to deal with many more stakeholders like landowners/landlords, tenants, commercials etc. At times as a part of the larger cluster, the Developer is required to take up projects which otherwise are not viable. The other side of this scheme is that even though the overall liability is significantly higher, it is not as attractive and rewarding as other single redevelopment proposals.

Since the primary reason was that the current cluster development policy had several loopholes and was not attractive for the Developers, the State Government has now announced an amended cluster redevelopment policy which as per the realty industry experts, is considered Developer friendly.

The State’s amended policy has diluted certain terms and conditions of old policy to encourage more cluster developments projects to be undertaken by the Developers. Unlike the old policy which was earlier restricted only to the island city, will now cover the suburbs also. The condition is that the size of the plot should be at least 10,000 sq. meters in the suburbs and a minimum of 4,000 sq. meters within the city limits. The bigger the size of a plot for cluster redevelopment, the higher will be the Floor Space Index (FSI) the Developer gets.

Floor space index, or FSI, refers to the size of a plot vis-à-vis total area of construction. For instance, an FSI of 3 on a 1000 sq. meters plot would mean the Developer can construct houses measuring 3000 sq. meters.

The earlier rule that a project should have the consent of 70 per cent of tenants stands unchanged but now the consent of 70 per cent of landowners/landlords will be needed as against the earlier term of 100 per cent as landowners/landlords were a major stumbling block to such projects. They often blackmailed Developers by demanding huge amounts besides a share of the project pie. Because of them, most cluster redevelopment projects have been stalled for years. It is expected that the amended policy would bring relief to such stranded projects.

The new scheme envisaged that if a Developer acquires consent for 70% of the land, the State Government can intervene to acquire the rest of the land. A minimum carpet area of a redeveloped flat will be 300 sq. feet. Buildings having an age of more than 30 years or those which have been declared ‘dilapidated’ shall qualify for cluster redevelopment.

Those tenants, who opt for the project within three years of the announcement of this policy i.e. up to December 2016, shall be eligible for additional 10 per cent of the carpet area. Besides, those Developers whose projects had earlier been rejected can now resubmit their proposals under the new guidelines.