The redevelopment of a large number of dilapidated buildings in Greater Mumbai is being held up because of the high premium demanded by the Maharashtra government to convert the collector's land, on which they are built, into freehold land. Recently, there were news reports that the government may levy a premium of only 5% of the ready reckoner (RR) rate for converting the land into freehold, provided the cooperative housing society (CHS) goes in for self redevelopment of its building. The reports further stated that the premium will be 15% if the CHS goes to a builder for redevelopment. For the past 12 years, the Federation of Grantees of Government Land has been demanding a 5% premium. However, it appears that the government has not understood our issue.
First, let us understand why we are asking for a 5% premium for freehold. In the last 12 years we have faced many problems from the government. Whether it is an increase in membership transfer fees, high premiums for freehold or lack of rules for many issues, we have been facing problems. We want freehold, for us to get away from this British 'zamindari' system. For us, freehold means freedom - to decide how we want to live and not be dictated by the government - and equality with other landholders so that we can decide how we want to do our redevelopment and when to do it. We asked for a freehold at 5% premium not only because of discriminatory policy wherein residential 'nazul' lands can convert at 5% of RR rates but mainly because it is affordable to the large majority of the land holders.
The policymakers are thinking that builders will benefit if 5% of RR for freehold is given to all the CHSs. But this thinking is totally incorrect. If there was money to be made by builders then we could have seen good response to these lands as the policy for freehold has come into being about five years ago. In the case of so-called Collector's lands, the redevelopment activity is very low. Even if the land is allowed to be made freehold at 5%, the builders will still not be attracted to these lands because making the lands freehold is very complicated.
It requires the landholder to make the land free of violations. These violations are mostly related to approval of membership transfers. CHSs either face red-tape or have to bribe their way through to get membership approvals or getting the land freehold. Years pass away for making the land freehold. In between, there are sudden drastic changes in policies. This makes a builder wary of these so-called Collector's lands. All these issues have made most of the CHSs decide that they will make the land freehold first and then go for redevelopment at a suitable time.
Secondly even if the government wants a 15% premium for redevelopment through builders, this money is not going to come from builder's profits, rather it will come in form of reduced corpus or lesser areas to the existing members negating the very basis for which this rule is made in the interest of self-redevelopment. Huge funds are required to be galvanised prior to getting approval from the BMC. Additionally, the Collector lands will have to pay a freehold premium. From getting the membership approval, paying the freehold premium, permissions till BMC nod and getting the bank loan, at all stages, bribes will have to be paid. For CHSs, these bribes cause turmoil within the members firstly since they do not know how much bribes are actually being paid and secondly who will be accountable for these amounts. I hope the government does not complicate the situation and instead agrees to a 5% premium without any preconditions.
(The author has been campaigning for the middle class for more than a decade)