Self-Redevelopment is a type of redevelopment where the entire process and all decisions are controlled by the members of the society instead of giving it to a Builder is called.
Pre-requisites for starting Self Redevelopment Process in Mumbai
Before a housing society decides to start the self redevelopment process, it is a good idea to check if they have all the necessary requirements to start the procedure for self redevelopment.
Following conditions should be met for a society to start the self redevelopment process:
- First and foremost, the Housing Society should be the owner of the land, i.e. it should have the Conveyance Deed in its name or should have the land purchase agreement in its name.
- Second, the housing society has to be registered under the Maharashtra Cooperative Societies Act, 1960 as a Cooperative Housing Society.
- Third, the housing society should be a member of The Mumbai District Central Co-operative Bank Ltd (MDCC Bank) to avail self redevelopment loan under the Self Redevelopment Scheme, 2018. If the society is not a member of this bank, they can become a member by purchasing shares of the bank.
- Finally, before applying for a loan for Self Redevelopment of the society with MDCC Bank, all pending Government dues have to be cleared off. Also, as on the date of application, Society Maintenance from all members needs to be paid with no arrears.
Starting the procedure for Self Redevelopment
Once a housing society has checked that it fulfils the requirements to start the procedure for self redevelopment of their housing society, they can start with the self redevelopment process:
- The first step is to get the consent of all the society members on taking the Self-Redevelopment approach for redevelopment of their premises. A resolution has to be passed by calling a Special General Body Meeting.
- Get copies of all the required documents in place, which include:
- Land purchase agreement or conveyance deed – Land ownership proof
- Copies of original plan of the building, 7/12 extract and property card
- Audited financial statements for last 3 financial years
- Copy of updated byelaws and registration certificate of the society
- List of committee members
- Details of all society members including their unit sizes as per the actual plans.
- The society then needs to appoint a Project Management Consultant to make a self-redevelopment project report (feasibility report) which provides important details like development potential as per the latest norms, overall budget and cost break-up for the project and the possible benefits to the society members. This report lays the foundation for the entire project and is referred to at different intervals as a central guideline for making the project reach its success as envisaged.
After taking the decisions based on the Feasibility Study report, the society then moves ahead to appoint Architects, Legal Advisors, Chartered Accountants, Contractors who then guide the society at various stages of the self redevelopment process.
Along with the documents mentioned above, the society also needs to have in hand copies of agreements entered into with the Architects, Chartered Accountants, Legal Advisors etc.
Once all plans have been laid out and all documents are in place, the next step is to approach a bank for funding for the self redevelopment project.
Funding for the self redevelopment project
All the above mentioned sets of documents have to be submitted to MDCCB along with the application form for getting a Self Redevelopment loan.
MDCC Bank or MDCCB better known as the Mumbai District Central Co-operative Bank Ltd is currently the only cooperative bank in Mumbai authorized to provide loans for self redevelopment projects in Mumbai.
MDCCB provides loans covering up to 95% of the project cost; the remaining 5% is required to be arranged by the members of the Housing Society. MDCC Bank provides the loan at 12.5% simple rate of interest.
Depending upon the project cost, the loan repayment period and the moratorium period varies. Moratorium period is that duration during which the interest is incurred on the disbursed amounts but the society does not need to repay anything to the bank.
If the project cost is less than 50cr, the total loan period is of 7 years with a moratorium period of 2 years. If the total project cost exceeds 50cr then the total loan period is of 10 years with a 3 year moratorium period.
The MDCC Bank takes into consideration rents for alternative accommodation, shifting, re-shifting, TDR, fungible premium, professional fees, brokerage, construction cost and any other additional amenities planned in the redeveloped society like play area, garden etc. for calculating the Project Cost.
It is important to note that MDCC Bank will only provide the 95% part of the Project Cost after the remaining 5% has been collected by the society members.
In case the society members are unable to generate the required 5% amount themselves, Project Management Consultants like Wedevelopment can help the society members get funds from Private Investors or NBFCs.
Selecting the right team is CRITICAL for the project success.
Every player in this selected team of the self redevelopment process has a very crucial role to play; hence it is important to get experienced and knowledgeable professionals on board for their requisite roles in the project.
One practical option that the societies have started opting for is to simply appoint one experienced Project Management Consultant (PMC) like Wedevelopment.
The Wedevelopment Team and work done so far
Wedevelopment is one of the most experienced Project Management Consultant for Self Redevelopment in Mumbai today.
Saptarishi CHS in Borivali is one of the first completed Self-Redeveloped projects in Mumbai. A key member of the society, Arch. Umesh Gavade, who played an important role in the self-redevelopment of Saptarishi CHS is now a key part of Wedevelopment.
From the multiple self redevelopment projects for which Wedevelopment is the Project Management Consultant, two projects – Harmony (Suma Sam CHS) and Jayakunj CHS in Borivali West – have received funds from MDCC Bank and have progressed steadily completing 75% of construction within a short span.
The other projects are in Design Finalization, Design Planning and IOD stages.
Wedevelopment provides end-to-end support for self redevelopment process, starting from arranging the initial finance, managing the design execution process through empanelled professionals, getting required approvals, managing the MDCCB loan sanction and disbursement process, managing the cashflows and the legal documentation while monitoring overall work to ensuring completion of the self redevelopment project in time. Wedevelopment also has the expertise and network to manage the sale of flats to support the society pay off the bank loan.