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On 5th October 2013, the State Government, with a view to facilitate construction of affordable housing, announced an increase in the Floor Space Index (FSI) for old Maharashtra Housing and Area Development Authority (MHADA) buildings from 2.5 FSI to 3.00 FSI. The move will affect the redevelopment of around 5,000 dilapidated MHADA Colonies. 

The State Urban Development Department made the modification in Development Control Rule (DCR) 33(5) recently and subsequently issued the Notification which specifies that the existing MHADA tenants will get houses with a minimum of 300 sq.ft carpet area in their flats. They will get an additional 35% space plus the existing area in residential and additional 20% space plus existing area in commercial structures.

However, to rein in fraudulent practices by Developers to lure tenants, the Government has also imposed a cap of 861 sq. ft as the maximum rehabilitation area that can be offered to tenants, excluding the balcony portion.  

In redevelopment, at least 60% Built up Area will be kept for the economically weaker sections (EWS), Lower Income Groups (LIG) and Middle Income Groups (MIG). These houses will be sold through MHADA Lottery. The residents can redevelop their properties through a private Developer after obtaining NOC from MHADA.

In redevelopment, if the size of the plot is bigger, then the Housing Society can avail additional space. The Society will get 15% additional space if the redevelopment is taking place on a plot measuring between 4,000 sq. metres and two hectares, 25% for those between two and five hectares, 35% for five to ten hectares and 45% on more than 10 hectares of land.
Moreover, after rehabilitating the existing tenants, the balance FSI will be shared between the Cooperative Housing Society and MHADA.

56 of the 104 MHADA colonies are situated on large plots. The idea is to encourage Cluster Redevelopment on such plots for better infrastructure and planning.

An additional 15% area will be offered to tenants if they opt for a development or a joint venture agreement with MHADA. The draft notification issued in May, 2013 had proposed a 10% area incentive

The Developer's incentive and MHADA's share in surplus Built up Area has been linked to market rates to make projects in lesser developed pockets viable. The Incentive FSI offered to Developers will range from 40% to 70%, taking into account the Ready Reckoner Rates and construction cost.

Meanwhile, the Society's share in the surplus area remaining after the rehabilitation and the incentive component will be 30% to 45% whereas MHADA will retain the remaining Built up Area.