MUMBAI: The BJP-controlled state urban development department (UDD) is set to favour some builders, exempting them from paying premium to the BMC for building extra areas under a 2012 rule.
The modification will come as a major bonanza for developers who built luxury residential projects in south and central Mumbai. They built areas like flower beds, lobbies and terraces far in excess of what was permitted and now do not want to pay the premium because they say their projects received part-approvals prior to the January 2012 rule.
UDD secretary Nitin Kareer said the proposal is "in the pipeline'' and awaiting final approval. The department claimed this was being done "in the public interest''. "It is necessary to urgently modify the regulations..,'' it said.
On January 6, 2012, the Congress-NCP government approved then civic chief Subodh Kumar's plan to collect a hefty premium from builders, who build areas over the permissible limit. But developers who had already received the preliminary sanction (IOD) (say, for the first five floors) prior to January 6, 2012, were exempt from the payment for that portion of the building.
However, when they sought further permissions (say for another five floors) after this date, the rule mandated they pay this premium.
It was this stipulation that annoyed several city builders whose ultra-luxury projects were already halfway through. The chief minister-controlled urban development department has now come to their rescue. The BMC is expected to lose substantial revenue as it could open up the floodgates and allow many builders to take advantage of this modified rule.
"The state government has now overturned Kumar's decision following intense lobbying by some developers,'' civic sources said.
Builders who will benefit constructed unusually large flower beds, voids, common lobbies, terraces, which were earlier not counted in the building's floor space index (FSI)__the ratio that determines how much can be built on a plot.
Kumar had put an end to this practice because many builders misused these spaces and made a killing by selling them as part of the apartment to the purchaser.
"They illegally sold areas like flower beds, voids, common lobbies, terraces at market rates to flat buyers, although these areas were not part of the building's FSI. The purchaser would then illegally amalgamate these areas into the apartment to make the habitable area much bigger,'' said sources.
For example, in case of an upcoming luxury skyscraper in central Mumbai, an earlier civic chief allowed the developer an additional 13,000 square feet on each floor, which was not counted in the FSI. The permitted FSI on each floor here is 17,000 sq ft.
Sources said builders used to bribe their way through the system to procure these extra areas and sell them to the buyer. The consumer paid the developer earlier, now this money would come to the BMC as premium.
The 2012 rules for compensatory FSI introduced by Kumar and approved by the then Congress-NCP government allowed developers to build 35% extra space if they paid a hefty premium to the BMC.
However, in September 2014, the urban development department proposed a modification to exempt builders who had received part construction sanction prior to January 6, 2012. "Since these builders had already procured the IOD, their contention was they be allowed to continue to build under the earlier development control rules,'' said sources.