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December 2019

Self-Redevelopment: The apt solution for better quality homes

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It has emerged as the most apt solution to the redevelopment problem in Mumbai

India’s financial capital Mumbai has nearly 14,000 buildings that are in dire need of redevelopment, according to private estimates. The shocking number of old buildings in Mumbai is a matter of concern, as news of such buildings collapsing is on the rise. While MHADA has helped in repairing 1000 dilapidated buildings, more than 3000 buildings have been repaired by the Society members themselves. In Mumbai, while increasing costs and shortage of space makes it impossible for residents to move out of ageing and derelict buildings, for them the concept of self-redevelopment has become a dream come true to have a new, better & safe home to stay.

Close to 5,800 projects are stuck due to Builders’ failure to fulfil their obligations. Many of them have defaulted on paying for the temporary accommodations rented by the displaced residents, leaving them with no other option but to stay with their close relatives. On the contrary, self-redevelopment allows Societies to act as Builders, hire Contractors, Architects, control the use of land and retain the profit that otherwise would have gone to the Builder. Perturbed by the frequent cases of fraud by real estate Builders or slow-paced progress of Projects under them, the residents of several Co-operative Housing Societies in Mumbai embraced a newer model of rebuilding self-redevelopment.

Taking this into consideration, self-redevelopment has emerged as one of the most apt solutions to the housing problem in Mumbai. In the self-redevelopment model, Society members resort to the project redevelopment of their homes themselves. Within this framework, the Society has complete authority to select the right set of professionals to implement the process, raise funds and conduct feasibility studies. The arrangement ensures faster project delivery, higher profits and complete control over the use of the land, keeping the fallacious Builders at bay. The funds raised are then used for initial expenses of recruiting professionals such as Contractor, Architect, Accountants, Legal advisor, and so on, for the execution of the project, and the sale of the extra units developed in the process.

Under self-redevelopment, the homeowners are the sole benefit reapers as they save more and earn profits. The homeowners have complete control over the quality of construction, the completion timeline, and enjoy more surplus funds because they retain the right to sell surplus homes generated in the redevelopment process. Different professionals are hired for the execution and management of the project. Hence, they have no binding authority on the project, and the Society is free to plan and design the new construction, easing the rent allotment procedure and acquisition of extra space.

To accelerate this process, the government has already launched the self-redevelopment scheme, with MHADA promoting a single window system for the prompt processing of self-redevelopment proposals, while the MDCC Bank has sanctioned loans to provide financial support to housing societies undertaking self-redevelopment, thus giving a boost to the popularity of this approach.

The foremost thing for a building to go under self-redevelopment is the consensus among members regarding the project. There is a high level of competence, legal and construction expertise, constant monitoring of changing mandates, proficient management of loans and conflict, project sales, and excellent communication and coordination skills that are required to undertake a self-redevelopment project.

To avoid inefficiency arising from this, Societies should hire a professional team to initiate and monitor the entire self-redevelopment process. They, in turn, handle all the layered complications and procedures, from the conceptualization and the fundraising, to the ultimate execution of the project. By simplifying and accelerating the process, the benefits of self-redevelopment are retained, the process is hassle-free, and the society maintains power over the project. Collaborating with such a team of experts allows the community to extract maximum advantage from the self-redevelopment process.

On the whole, self-redevelopment is a pragmatic solution to the conventional problem and is emerging as a movement. In fact, many housing societies in Mumbai are resorting to it now. Not only does it assure government support to the distressed residents of old buildings but also ensures better planning, construction and timely delivery of the projects.

Self-redevelopment puts societies in complete charge: Pranay Goyal, Wedevelopment

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Self-Redevelopment in Mumbai

Pranay Goyal, founder, Wedevelopment, in an exclusive interview with explains the crucial benefits societies will get if they opt for self-redevelopment and how this process can mitigate the problems that home owners have faced, with builders redeveloping their societies.

Some edited excerpts of the interview:

Q: What is self-redevelopment? How has self-redevelopment been a crucial aspect for societies, especially in aggressive real estate markets such as Mumbai?

A: Under self-redevelopment, the entire redevelopment process is planned, executed and managed by the society members, instead of handing over the process to a builder. Typically, most societies preferred to redevelop their buildings through real estate builders, as they are not aware of all the requirements that come along with this process. Redevelopment through real estate builders is a tug of war where both the parties strive to get maximum benefits for themselves. This tussle, many a times, leads to situations and consequences which are not in favor of the society members.

As per media reports, there are more than 5,800 projects in Mumbai, which are stuck in redevelopment today, affecting more than 1,25,000 families. The reasons for all these projects getting stuck, range from lack of funds to delays in permissions to miscalculations in carpet area allotment. While the reasons are aplenty, most of the times, they are directly related to the builder’s handling of the redevelopment project. For society members, taking up self-redevelopment of their housing society keeps the members safe from any problems arising from the builder and the society is assured of more benefits and profit from the project.


Q: How is self-redevelopment different from traditional redevelopment? What benefits does self-redevelopment offer to a society that opts for it?

A: In the case of self-redevelopment, the overall control of the project is always in the hands of the society. There are multiple advantages for a society opting for self-redevelopment over builder-led redevelopment. Listed below are crucial benefits:

1. Extra area

Society members get higher carpet area as compared to what is offered by builders. Society members can further buy extra area on cost basis for themselves.

2. Surplus

The entire surplus generated by the project gets distributed amongst existing society members, which otherwise would go to the builder.

3. Control

In the case of self-redevelopment, the entire control remains in the hands of the society. This includes appointment of agencies/resources, cash flow decisions, sales decisions, design decisions and all critical decisions throughout the project. With complete control, the project moves according to the requirements of the society and they have a complete view of the possibilities of the end results, based on their decisions.

4. Risk mitigation

The society has complete control on every decision and this authoritative position helps them in minimising risks. The society can take immediate decisions on cost-benefit ratio and get the operation moving ahead faster. Also, the society can take all the permissions before vacating, thus, securing the project from getting impacted due to any change in norms later.

5. Society as promoter

The NOCs, designs and documents are directly in the name of the society. These clear assets, which even after the members start residing, are otherwise not available today with societies. In self-redevelopment, this becomes a big advantage as all these are in the name of the society.


Q: What are the initiatives that the government of Maharashtra has come up with, to encourage self-redevelopment?

A: The government has already launched the self-redevelopment scheme, with MHADA promoting a single-window system for the prompt processing of self-redevelopment proposals, while the MDCC Bank has sanctioned loans to provide financial support to housing societies undertaking self-redevelopment, thus, giving a boost to the popularity of this approach. Also, in September 2019, the government issued a Government Resolution (GR) that caters specifically to self-redevelopment. The government has doled out a number of concessions for registered housing societies that opt for self-redevelopment. This includes a one-window system, extra FSI and incentives like a time frame for approvals from the planning authorities, for carrying out the construction of the project.


Q: A society may have concerns that it may not be able to go in for self-redevelopment since they don’t have enough knowledge about the process. What is the way forward for such societies? How can they ensure that their interests are safeguarded?

A: We believe in first educating the society, to help them in taking an informed decision. Once we take them through all the nuances of self-redevelopment and see their readiness, we engage with the society, to check the feasibility of the project. When the society understands the different aspects of the project, such as the feasibility, the costs involved, the amount to be budgeted and the possible benefits, the society becomes much more aware of what lies ahead in the project and is in a position to take a thorough decision, considering all perspectives. This is the stage at which we get enrolled by the society as a development manager, to plan and manage the execution of their self-redevelopment journey.


Q: Is it easier or more difficult to get banks’ financing for self-redevelopment projects? Why?

A: Currently, the Mumbai District Central Co-operative Bank lends to self-redevelopment societies. Loans are available, once the society gets the ‘Intimation of Disapproval’ or IOD for the project. The bank currently funds up to 95% of the project cost, at 12.5% p.a. rate of simple interest and a small processing fee of 1%. The society can later repay the loan and the interest, through the revenue generated from the saleable area. For banks, funding self-redevelopment projects is the next big untapped opportunity. With the Maharashtra Housing and Area Development Authority (MHADA) and the state government promoting this path-breaking concept, many other banks have started taking a keen interest in understanding and lending to such projects.

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Every problem is unique, and requires an all-round perspective to arrive at the best-fit Solution
Being a leader in the Self-Redevelopment space brings its own sets of responsibilities, of creating the right path and helping others in moving in the right direction.
Troubleshooter, is an initiative by Wedevelopment to guide Societies who are willing to opt for self redevelopment or already have initiated the journey of Self Redevelopment but have hit a wall in the process.
It is a One to One Consulting platform for Co-operative Societies to get the right answers.

The above Consulting is for the following Category of Societies/Challenges:

The Team of TroubleShooters:
Wedevelopment along with the following Industry experts are coming together to help you:

The Cost:
This Consulting Session is FREE for the Societies registering before 10th July 2020.

Please note:
In order to organise the session with the right expert and value time of the session, Society is requested to send a note with the following info:

"If you have knowledge, let others light their candles in it" - Margaret Fuller

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