Self-Redevelopment In Maharashtra: Balancing Opportunities With Risks
Why Housing Societies Are Considering It, And What They Must Watch Out For
Across Maharashtra, particularly in Mumbai, Thane and Pune, self-redevelopment has become a popular option for housing societies. Rising dissatisfaction with builders, coupled with government support and regulatory permissions, has encouraged societies to take control of their own redevelopment projects. The promise is clear: better homes, more free-sale benefits, and complete ownership of the process. Yet, self-redevelopment is not free of challenges. Members often raise practical and serious concerns that must be addressed before such a decision is taken.
The Question of Capital
The foremost concern is financing. Societies generally raise capital from co-operative banks, members’ own corpus (if available), and future free-sale flats revenue. Co-operative banks, with the backing of MHADA or government schemes, are now increasingly supportive of self-redevelopment. Loans are sanctioned in phases and disbursed through escrow accounts, ensuring that money is strictly used for construction milestones. This financial structure gives confidence to banks while offering societies a measure of safety.
Cost of Borrowing and Risk of Default
While bank loans for self-redevelopment typically range between 8–12% interest, the cost of capital remains significant for societies. If loans are not serviced, there is always the theoretical risk of banks initiating recovery action. This fear of “losing property” is common among members. The practical safeguard lies in careful financial planning, phased loan disbursement, and transparent monitoring of expenses. Government subsidy lines or support schemes, if availed, can further reduce interest costs and risks.
Managing Committee’s Role and Burden
The society’s managing committee acts as the de facto project manager. This involves selecting reliable consultants, ensuring statutory compliance, handling banking relations, and keeping all members informed. Members worry about over-burdening the committee or exposing them to liabilities. To protect themselves, committees should pass clear general body resolutions, purchase liability insurance, and ensure all decisions are collective, not individual. When decisions are democratically authorized, accountability is shared by the society as a whole.
Delays and Unforeseen Risks
Construction delays are almost inevitable in redevelopment. Delays increase costs, disrupt members’ timelines, and sometimes cause panic. Societies can reduce this risk by:
- Adding penalty clauses in contracts with contractors and consultants.
- Keeping a contingency fund for emergency expenses.
- Choosing a professional Project Management Consultant (PMC) who monitors progress.
Another common fear is accidents on site. Members worry that a fatal accident could lead to committee members facing criminal liability. In practice, if statutory norms are followed and Workmen’s Compensation Insurance and Site Insurance are in place, personal liability is very rare. Responsibility lies primarily with the contractor and safety officers.
Consultants and Professional Support
Self-redevelopment is not possible without professional expertise. The core team usually includes:
- Architect (design, approvals, liaison with municipal bodies)
- PMC (Project Management Consultant) (day-to-day supervision, planning, cost control)
- RCC Engineer (structural stability and design)
- Chartered Accountant (financial structuring, tax compliance, audit)
- Lawyer (contracts, regulatory approvals, conveyance, legal vetting)
- Contractor/Builder (execution of civil work)
Members often fear consultants or contractors leaving mid-way, which can cause chaos. This can be prevented by drafting strong contracts with exit clauses, notice periods, and escrow of all drawings/data so that the project does not stall.
Cost of Consultants
Professional fees vary but usually account for 5–10% of the total project cost. A PMC typically charges 2–3%, an architect 1–4%, while legal and accounting fees depend on case complexity. While these costs may seem high, the role of consultants is critical in avoiding costly mistakes, delays, or legal non-compliance. In reality, the savings and efficiency they bring often outweigh their fees.
Limiting the Committee’s Liability
Beyond insurance and resolutions, committees can also adopt best practices like:
- Engaging independent auditors for quarterly reviews.
- Maintaining 100% transparency with members via circulars or WhatsApp updates.
- Recording all major decisions in general body meetings.
These measures ensure that no single committee member is personally at risk, and that responsibility lies collectively with the society.
The Balanced Path Forward
Self-redevelopment is both a challenge and an opportunity. For housing societies, it promises modern flats in the same familiar locality, along with higher free-sale revenue and control over planning. But this comes with responsibilities—financial risk, management burden, and the need for professional expertise.
Societies that succeed are those that combine strong internal unity with external professional guidance. With proper financial planning, clear contracts, and safety nets like insurance, most risks can be minimized. Ultimately, self-redevelopment is less about individual committee members carrying the weight, and more about the collective will of the society to build its future together.
