Curation Team
The Maharashtra Housing and Area Development Authority (MHADA) has approved a key policy change to make redevelopment projects under its Mumbai Board more viable by revising the method of calculating premium charges on commercial floor space.
The decision, taken at a recent MHADA authority meeting, modifies provisions of an earlier June 2007 resolution. Under the earlier rule, housing societies or developers redeveloping buildings in MHADA layouts and seeking additional commercial space were required to pay premiums calculated at 1.5 times the residential rate, with a minimum levy of 60% and a maximum of 142.5%. Developers had long argued that this mechanism made projects financially unviable.
Realty developers had represented to MHADA that the “1.5x rate” imposed an undue burden on projects, slowing down redevelopment in MHADA layouts. The association pointed out that Regulation 33(5) of the Development Control and Promotion Regulations (DCPR) 2034 did not provide for separate premium calculation for residential and commercial areas, leading to ambiguity.
Taking these submissions into account, MHADA has now introduced a transparent, formula-based method.
Under the new system, premiums for extra commercial space in redevelopment will no longer be a fixed multiple of residential rates. Instead, they will be based on a formula that starts with the Ready Reckoner land value, applies the DCPR percentage for commercial use, and adjusts it by comparing local commercial and residential market prices. The resulting figure will be the premium rate.
This revised formula is intended to benchmark charges to actual market conditions, ensuring fairness and reducing financial strain on both housing societies and developers. Officials said the move will bring objectivity and transparency, making it easier for redevelopment projects to balance costs.
The decision comes against the backdrop of rising population pressures, infrastructure demands, and Mumbai’s rapid economic growth. By easing redevelopment processes, the government aims to fast-track housing supply in the city.
According to officials, the policy shift is expected to unlock stalled projects and encourage developers to take up redevelopment of old MHADA layouts, thereby adding to Mumbai’s housing stock while aligning commercial viability with public housing goals.
