MHADA Revises Premium Charges for Commercial Area in Redevelopment Projects

The Maharashtra Housing and Area Development Authority (MHADA) has revised its premium charge policy for commercial areas within redevelopment projects. By replacing the earlier fixed multiple rate method, MHADA now introduces a formula-based calculation, aimed at ensuring fairness and enhancing project feasibility.

New Formula-Based Premium Structure Introduced

MHADA has moved away from its older pricing mechanism, where developers were charged premiums up to 1.5 times the residential rate, with a cap ranging between 60% to 142.5%. Under the updated guidelines, premiums will now be computed using Ready Reckoner land value, the Development Control and Promotion Regulations (DCPR) commercial usage percentage, and local residential-commercial market price ratios. This update addresses longstanding concerns by developers regarding project profitability under the older regime.

Rationale Behind Policy Change

Developers argued that a uniform 1.5x rate on commercial spaces created undue financial pressure, stalling redevelopment in several MHADA layouts. Since Regulation 33(5) of DCPR 2034 does not differentiate premium calculations across use types, the old policy lacked clarity. This revision now aligns the premium with actual market dynamics, offering greater transparency.

Impact on Mumbai Redevelopment Ecosystem

The change is expected to unlock stalled redevelopment across MHADA layouts in Mumbai. Eased cost burdens may encourage housing societies and developers to initiate or accelerate redevelopment efforts, thereby contributing to an increase in the city's housing stock while maintaining commercial viability.

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Focus on Transparency and Financial Feasibility

The goal of the revised policy is to ensure objectivity in premium determination. By considering real-time market conditions and location-specific data, the formula offers predictable and transparent cost expectations, helping stakeholders make informed redevelopment decisions.

Conclusion

MHADA’s policy revision marks a critical shift in Mumbai’s redevelopment framework. By introducing a market-linked premium mechanism for commercial areas, it enhances financial feasibility, addresses developer concerns, and supports city-wide housing goals aligned with urban growth projections.

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