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CEO – Pinnacle Group, Pune
The changing economic scenario, land crunch, and soaring real-estate prices in cities have resulted in inflation in the sector. Old buildings – the haphazard and disorganised construction planning of the past is seeing several homes on the verge of collapse, giving rise to imminent risk and safety concerns for its residents.
A structure constructed in the 70s and pre-70s generally goes through stages of repair, giving rise to safety concerns for its residents. However, such structures should be carefully accessed and redeveloped instead. Besides, compared to repairs, redevelopment is more sustainable. Repairing any building that is 25 years old will increase its life only by three or four years. It is not structurally or economically feasible. Redevelopment is the need of the hour that requires momentum and it is essentially the perfect solution for both the supply side and demand side. In fact, redeveloping residential societies would play a key role in the ‘smart city’ mission.
However, the procedure is not without its hassles. Residents across the nation, especially in cities like Pune, where redevelopment is rampant, are facing issues because of delayed deliveries of the re-developed projects. There have been umpteen incidents where established developers abandon or delay the projects or stall the construction midway due to financial indiscipline.
In order to manoeuvre these roadblocks that make the redevelopment process tedious, first and foremost, society members need to be aware of the redevelopment procedure. So what are the things that one should know about the redevelopment of housing projects?
Legal aspects
The first step to redevelopment is choosing the right builder and the most effective way to do so is by selecting through the tendering procedure.
It is also crucial that the society members appoint a Project Management Consultancy (PMC) of their own, which must comprise a CA, RCC consultant, architect and an advocate, before signing any contracts with the builder. Once the contract/agreement has been signed and registered, only then must the members vacate their homes. The agreement must clearly specify the obligations and expectations of the builder and the tenants as well as the penalty in case of breach of the contract by either party involved. Also, tenants must ensure that the developer has secured essential legal approvals and permits for redevelopment.
Bank guarantee
The builder ought to provide a bank guarantee of the total project RCC cost. This will serve as monetary compensation in the assurance that the project is not stopped midway or delayed. But, instead of a bank guarantee, society must demand the entire cost of RCC to be borne in advance in an escrow account with the society. This ensures greater financial security and serves as a safer option than relying on a bank.
Transfer of development rights (TDR)
Residents of the society must ensure that the developer buys the additional TDR and FSI of the tenants’ built-up area and loads it on the society. They must confirm this before they vacate their house because if the FSI rules alter after vacating, the builder may not be able to provide the extra flat area he had promised.
Alternative accommodation
The developer should agree to provide a monthly compensation in advance and also transportation and brokerage charges to the society inhabitants as they would incur these costs while securing and renting alternate accommodation.
How does redevelopment benefit tenants?
Enhanced standard of living
Redevelopment assures a better standard of living for the existing tenants and also for new buyers. Besides reconstructing the building from scratch, it also provides improved facilities like concealed plumbing, firefighting, clubhouse, intercom facilities, cable and telephone wirings, smoke detectors and so on, that older complexes generally lack.
Cost-effective
Structural repairs increase an old property’s life only by 4-5 years. Moreover, repairing is not economically or structurally feasible for weak walls, seepage and leaking water pipes, amongst other issues. This makes redevelopment an ideal alternative where land can be optimised for a better purpose, even in prime locations without huge investments upfront. Furthermore, improved facilities also mean a reduction in repair and maintenance expenses.
Adequate supply
Redevelopment can also solve the problem of housing shortage in prime urban locations since old buildings are reconstructed with additional flats. It is a win-win for tenants as they get a new home with more space without the added cost.
Better value
Since redevelopment results in new structures with updated amenities, the overall real-estate value of the property tends to experience an upsurge, ensuring better value. Society members need to consider the future maintenance cost which drastically rises depending upon the location and design. Besides premium capital values, a redeveloped home also commands better rentals.
EnvironmentÂ
Redeveloping old structures is beneficial to the environment in more ways than one. Along with offering opportunities to revitalize neighborhoods with economic development, better housing with parks and open spaces, mixed-use development, and community centers, careful redevelopment of buildings can amp up underserved neighborhoods and improve community health as well.
There are also many environmental benefits to redevelopment.
By their nature, redevelopment sites are more likely to be located within population centers as opposed to community outskirts. If the community has been staring at a dilapidated lot for years, they should, in all likelihood, welcome something new with open arms. That being said, the society needs to have reasonable expectations in terms of additional area & timelines from the developer as the tenants’ desire for more area often reduces incentive for the developer. Redevelopment must be a beneficial project for all parties involved.
It should be a unanimous decision to avoid future disputes and make the process of redevelopment smooth. It is also important for tenants to understand that the quicker they vacate a site, cooperate in the design process with the developer to start construction faster, subsequently ensuring on-time delivery of the project.
With redevelopment projects, one gets to become the owner of a luxurious apartment in Pune’s premium locations. Since these new redevelopment projects are on a planned level, they pack in a plethora of modern amenities, meeting all needs of investors. Redevelopment makes space for more residential units to be added to the society, prospective home-buyers can easily opt to buy homes in desirable neighbourhoods. However, this is possible only when the society understands that they need to partake in this process equally and only with joint efforts of the society and developer, can the process of redevelopment take place with ease. It must also be understood that redevelopment has a massive role to play in improving the quality of people’s lives and eventually the city’s standard of living, and that’s why, most definitely, it is a smart swap.
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Views expressed above are the author’s own.
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