4.6] Understanding the housing acts of Mumbai

4.6 Understanding the housing acts of Mumbai

RENT CONTROL ACT, 1947

Some of the malaise of the housing crisis in Mumbai can be traced back to its history of poorly planned policy interventions in the land and housing market. Mumbai, which emerged as a centre of economic activity after independence had a vibrant rental form of housing especially amongst the working class. In 1961 about 90% of the housing in Mumbai was rental (Praja Foundation 2015). The construction of housing for rental purposes was seen as a viable investment option for the rich. This investment ensured monthly return in the form of rent and capital value appreciation over time (Praja Foundation 2015). Houses were constructed by the rich mercantile and business classes solely for rental purposes. The Bombay Rents, Hotel and Lodging Houses Rates Control Act 1947, also called the Rent Control Act, put a legal cap on rent, and any rent charged in excess of the State stipulated cap was illegal.

The Rent Control Act was to expire in 1973 but was extended until its replacement in 1999 (Tandel et al 2016).The objective of the Act was to prevent the eviction of tenants by providing tenancy protection and housing at a reasonable rent for the city’s rental population. The fixed rents did not consider reasonable inflation rates and provided negligible returns to the owners. Due to the low returns, owners discontinued to provide maintenance and no new rental housing was built. The transfer of tenancy through inheritance made the rental tenants permanent tenants (Nallathiga 2005). There was no incentive for the owner to regularly repair and maintain the buildings and the condition of the properties deteriorated. To arrest the rapid deterioration of rent-controlled properties, the State government collected ‘cess’2 from such buildings to go towards repair and maintenance (Tandel et al 2016). Such buildings came to be called ‘cessed buildings’.

To regulate rental housing, the Maharashtra state government passed the Maharashtra Rent Control Bill, 1999, and the Maharashtra Rent Control Act, 1999, came into effect on March 31, 2000. The Act aims ‘to unify and consolidate’ rental housing in the state and ‘for encouraging the construction of new houses by assuring a fair return on investment (RoI) by landlords’. After coming into effect, the Act replaced the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954 and the Central Provinces and Berar Regulation of Letting of Accommodation Act, 1946.

Figure 18) – Policy initiatives towards affordable housing in Mumbai

Source https://www.researchgate.net/publication/327513762_Redevelopment_of_buildings_in_Mumbai_city_Risks_and _challenges

THE MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966

The Maharashtra Regional and Town Planning (Amendment) Ordinance, 2020 was promulgated on August 28, 2020. The Ordinance applies retrospectively from March 23, 2020. It amends the Maharashtra Regional and Town Planning Act, 1966. The Act provides for the constitution of regional planning boards, preparation of development plans by the planning authorities and other related matters in the state.

The aims and objectives of this act were:

 To ensure that the operation of the economic system does not result in the concentration of economic power in hands of few rich.

 To provide for the control of monopolies, and

 To prohibit monopolistic and restrictive trade practices.

CLUSTER REDEVELOPMENT POLICY, 2008

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.

CHAPTER 5 – CASE STUDIES

1) Local context case studies

2) International context case studies

3) Redevelopment proposal case studies