Self Redevelopment

The Essence

Typically, a life of a concrete building structure in the Indian sub-terranean weather & climatic condition ranges from 60 years to 90 years. Besides, invariably the limestone structures while having a longer life relative to the concrete structures, they still get dilapidated, over 125 to 150 years’ time-period, depending on the maintenance and upkeep of the facilities. 

In certain cases, if the building is closer to the sea, then, the ‘wear & tear’ lead by corrosion may be more, and, adding to the structural damage of the building. In such circumstances the structurally compromised building has to be either broken down completely, and a new structure has to be built, or, the existing building structure has to be re-furbished, while maintaining the framework of the structure (in case of a concrete building).

 

There are multiple methods in which the building can be re-built or refurbished as follows:

Either by appointing a developer who on behalf of the owning entity, will re-develop the building either at a fee, &/or, by recovering the costs & expenses by selling the extra portion so developed in the open market.
Self-redeveloping the property by appointing various faculties of consultants, like the architect, civil engineer, building contractor, project management Consultant, etc.
Entrusting the entire re-development to an Asset Development Management Company, who, in turn will execute the development on behalf of the building owning entity, by appointing various agencies and professionals.

Considering the growing number of situations wherein, a property developer has either abandoned a re-development project; or, the number of litigations between the owner of the property, a tenement, a condominium or a cooperative society, and a property developer, certain state governments, like Maharashtra, came up with a policy enabling owners, landlords along with their tenants, members of the condominium, or, that of a co-operative society, to re-build their own residential, commercial, or industrial buildings/apartments.

Salient Features of Self-redevelopment:

The same FSI granted to a developer in a redevelopment project, became available to the re-development project if executed by the existing owners/occupiers. Which elementarily means that the FSI granted & available to a re-development project under the self – redevelopment scheme was the same granted to a developer on a like to like charge basis.
Further, to enable this re-development of an existing tenement, or a building owned by the members of a co-operative society, certain urban co-operative banks were enabled by the RBI and the ministry of finance, with a policy to finance such re-development projects, deploying the requisite credit risk, and appropriate debt coverage parameters.
Essentially, the existing owners of the building / members of the co-operative society take the onus of re-development of their property, by appointing various consultants, like design architects, liaison architects, construction contractors, lawyers, development managers, and applying and seeking the appropriate permissions from the appropriate authorities.
Once the permissions are secured, and if there is a for sale component, the co-operative society needs to register their intent to redevelop/rebuild the facility under RERA, since there is, likely a sale component, emerging out of the re-development as applicable under the FSI grant policy. However, in case the co-operative society decides to rent the newly created additional apartments then, in which case a RERA registration may not be required.

Before

After

Following is a typical, ‘high-level’ self-re-development process (which will require fine tuning, on a case-to-case basis):

Self-Redevelopment Resolution to be passed in the AGM of the co-operative society
Scoping & appointment of the Asset Development Manager
Appointment of the various consultants
Finalization of the plan
Re-development commencement
Re-development completion and hand over to the existing owners/society members
Parallel sale of the free-sale component by the development manager
Hand-over of the sold component/s to various buyers by inducting them into the society as members along with the physical hand over of the premises
Hand-over of the building to the society by the asset development manager
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