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Updated on: Monday, November 15, 2021, 08:21 PM IST

Mumbai: Lease of agreement with SRA developers will help get money from lenders

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The state housing minister Jitendra Awhad on Saturday announced that the government would all expedite slum redevelopment projects in Mumbai.He announced that henceforth there would be a lease of agreement between the developer and Slum Rehabilitation Authority (SRA) which will expedite the process, which otherwise would lag due to funding and other related factors.

SRA chief executive officer Satish Lokhande explained that the land belongs to the government, and during its redevelopment, one portion is for rehab while the other is for sale.

"Lease of the agreement was not happening before that we are doing now. In the lease agreement, SRA will be the leaser, and the developer will be the leasee for the free sale component and for the rehab portion, the society will be the leasee. Proper documentation of land titleship will take place," he said.

Getting funds for developers as funding has been a significant cause of worry during such projects. "A policy decision is on the government level. Supposedly, the said SRA developer is a leasee of saleable portion and wants to make it freehold. In that case, he can apply by paying a premium to the government and obtaining a loan for the project. However, this policy is at the consideration and decision-making stage."

For a builder having a lease of agreement will ensure the title crystallization.

"It will facilitate easy availability of bank loan to the developers which otherwise was a difficult task in slum redevelopment projects," said builder Vimal Shah, managing director of Hubtown Ltd (formerly known as Ackruti City Ltd) who has carried out several slum redevelopment projects in Mumbai.

He explained that funds to construct rehab buildings comes to the developer only through the sale part. "Therefore, though the rehab portion leasee will be with the society, the saleable portion land leasee will be the developer from where the capital investment comes. Therefore generating funds will become easy," he said further.

Many industry experts welcomed the move by the government to streamline the glitches. "A formal lease of the agreement will provide more clarity for the developers. Today, the developers are mired with various issues while implementing an SRA project, while a lease of the agreement will help address two major issues: legal and finance. There are hundreds of SRA projects which are stuck at various stages. If there is a formal agreement, then many cash trapped projects can be lifted as they will get a better financial option," said Kaushal Agarwal, Chairman - The Guardians Real Estate Advisory.

However, tenants of slum redevelopment projects have raised questions about this government decision. Chairman of Golphadevi S.R.A co-op Hsg Society Sharad Koli in Worli said there should be proper clarity.

"Though SRA is doing this to bring funds but if a developer is delaying the project after they are made leasee how the society will discontinue him from the project? Also, it has been stated that on the rehab portion, the society (tenants) will be the leasee, but for the sale portion, the developer will be the leasee supposedly, if the said developer fails to do the rehab project, how the tenants of a particular slum project will appoint another developer. Who will do the redevelopment if they do not get the free sale component? The project will become financially unviable as the saleable portion leasee would be with the previous developer who is not doing the job properly, and society wants to remove him. How such situations will be tackled?"

Meanwhile, as per reports, nearly 250 SRA schemes in Mumbai are currently languishing due to various factors. Though the SRA scheme started in 1996, but has been moving at a snail's pace and did not achieve in making Mumbai a slum-free city due to problems like corruption, disputes and infighting between slum dwellers and developers, alleged political vendetta, vested interest and regulatory problems among others.

This paper had earlier reported about the research conducted by the international property consultant Knight Frank on Mumbai Development Plan 2034 — Deciphering Mumbai's Future in November 2018— which revealed that of the 1.5 to 1.6 million slum households in Mumbai, only 1 lakh houses had been built for slum-dwellers in last 20 years.

Moreover, the report disclosed in 2019 had cited that at this rate, if it continues, then it will take another 300 years to rehabilitate slums in Mumbai, provided no new slums are added.

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Published on: Monday, November 15, 2021, 08:21 PM IST
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