Last month, a group of apartment owners came to meet me. They told me that some builders from Mumbai had approached them about redeveloping their 30-year-old apartment building. The builder had explained the potential benefits to the present owners, which got them interested. But the owners seemed a bit unsure about how to move forward, many of them are over 60 years of their age, and their children live far away, so they’re looking for guidance on what steps to take next
This article aims to encourage members to begin considering the emerging opportunities and future requirements of real estate redevelopment, particularly in light of the aging condition and current status of apartment buildings in cities like Bengaluru, Mangaluru, Udupi, Mysore etc. This is an attempt to share new insights with the members, based on my connections and experiences with professionals in Mumbai
As we all know, the lifecycle of a real estate project typically begins with land acquisition, where builders/developers identify and secure a suitable plot of land based on factors such as location, zoning laws, and market demand. Once the land is acquired, the planning phase commences, involving site analysis, feasibility studies, design development, and obtaining necessary approvals and permits from relevant statutory authorities. After planning, the construction phase begins, encompassing site preparation, foundation work, building structure, and utility installations, all managed to meet regulatory approvals / standards and timelines. Following construction, the development phase ensures the integration of essential infrastructure like roads, landscaping, and community facilities to enhance the project’s value and livability.
Upon reaching completion, the project undergoes final inspections and quality checks to ensure compliance with safety and legal standards. Obtain occupancy, completion certificates from the concerned statutory authorities. Finally, the handover phase involves transferring ownership or possession to customers, often accompanied by documentation, key handover, and orientation on property use and maintenance.
Once an apartment project or building reaches the age of 30 to 40 years, it often requires significant repairs or complete redevelopment due to a range of critical factors and such redevelopment results in shaping future-ready, strong urban environments –
| Sl No | Details | Details |
| 1 | Basic Reasons for redevelopment | a. Government mandate to demolish the unsafe and dilapidated building
b. Over time, structural integrity may deteriorate c. essential systems like plumbing and electrical become outdated, d. necessity to ensure the safety, functionality, and livability of the space. e. the building may no longer comply with modern safety standards/codes and f. for better urban planning regulations. |
| 2 | More Reasons for redevelopment | a. matter of aesthetics or convenience
b. Additionally, redevelopment provides an opportunity to optimize land use c. introduce modern amenities d. improve the overall value of the property e. utilization of new and upgraded FAR/FSI f. upgrading aging infrastructure, g. decongesting older neighborhoods, and h. aligning with the evolving needs of residents and city planners alike i. Energy-efficient designs, rainwater harvesting, and better waste management systems j. overall socio-economic development of the city |
| 3 | Critical Aspects and challenges for redevelopment | a. Clear statutory laws related to the redevelopment
b. Knowledge on redevelopment process and support from the ecosystem (Government, builders, owners, regulatory bodies, professionals) c. Delays in approvals and clearances. d. Financial mismanagement or disputes over fund allocation. e. Resistance from members due to lack of trust or misinformation. f. Encroachments and title disputes |
| 4 | Reference of Laws related to the Redevelopment | Most states have incorporated the concept of redevelopment in their Master Development Plans; however, Maharashtra stands out as a leader with the most extensive experience and expertise in redevelopment practices –
a. Maharashtra (Mumbai and surrounding regions) – Development Control and Promotion Regulations (DCPR) 2034 b. Delhi – Delhi Master Plan (MPD-2041) & Unified Building Bye-laws (UBBL) for Delhi 2016 c. Karnataka Master Plan 2015 and Revised Master Plan (RMP) – Bengaluru (RMP 2031 – Draft) |
| 4 | General Process involved in Redevelopment | a. Owners to decide on redevelopment
b. Conduct necessary general body meeting for the approvals c. Decision on Self Redevelopment or through Developers d. Documentation, e. Appointment of advisors – Legal, Financial, PMC, Architects etc f. Tendering Process for Redevelopment through developers g. Selection on various parameters – Developer h. Execution of necessary documents with the service providers, consultants i. Appointment of developers – execution of Development agreements j. Permanent alternative accommodation arrangements with each existing owners – for their new proposed flat with area and car parking k. Arranging the temporary accommodation to the owners l. Removal or demolition of the building / structure m. Redevelopment n. Revised Deed of Declaration – changes in the apartment including new units – submission o. Allotment of individual units and handover of common areas to the association p. Removal of old khata and apply for new khata for all the new units |
| 5 | Types of Redevelopment | Self Redevelopment –
a. Own Funds or loans from financial institutions etc b. Owners / Members retain full control over the project. c. No sharing of additional profits with developers. d. Higher financial returns for members/owners e. Prevention of common disputes associated with developers. f. 100% member/owners consent required Development through Builders/Developers – |
| 6 | Opportunities / Professionals involved in redevelopment | a. Legal professionals
b. Chartered Accountants c. Project Management Consultants d. Architects, Engineers e. Project Management Consultants f. Contractors |
| 7 | Important Laws / statute for Redevelopment | a. Existing building bye-law / development control regulations to support the redevelopment. All necessary approvals
b. Legal, Stamp Duty Act and Registration Act c. All Laws related to immovable property d. Income Tax, GST implications e. RERA |
| 8 | Government Support required | The success of the Redevelopment lies with Legislative reforms to provide legal clarity and incentives, without which the redevelopment is not possible –
a. Introduction of new law or Amendment to the Karnataka Apartment Ownership Act, 1972 to facilitate Redevelopment b. Introduction of Government Resolutions (GR) for redevelopment procedure, similar to Maharashtra’s redevelopment GR dated 04/07/2019 c. Provision for conversion of Condominium to Co- operative Societies under Cooperative Societies Act d. Amendment in the Revised Master Plan 2015 or upcoming master plan e. Appoint Competent authority and give powers to address the redevelopment grievance, instead of dragging to the long litigation before Civil Courts (like AR, DR, JR in Maharashtra) e. Any other support that enable or facilitate the smooth transition |
In Karnataka and other southern states, the registration of apartments is typically based on the super built-up area, with the undivided share of land specified either as a percentage or in square meters/feet. A crucial first step for the management committee is to consolidate this information, verify the current ownership details, and ensure that these match the title deeds and other relevant documents.
This article intends to spark interest and awareness within the real estate community, encouraging our professional members to upskill and expand their knowledge to effectively support apartment owners crossing the redevelopment process. Redevelopment presents a promising opportunity for professionals across various domains. It also brings with it important implications related to income tax, GST, accounting, auditing, legal compliance, and more. The sooner we begin to understand these aspects in depth, the better positioned we will be to seize emerging opportunities and provide meaningful value in this evolving sector.
The author CA.Vinay Thyagaraj is partner at M/s.Venu & Vinay, Chartered Accountants, he can be reached at vinay@vnv.ca for any clarifications
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