A Change in the Rental Housing Scheme?

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Guest blog by Arul

The idea proposed by the Maharashtrian government about rental housing scheme in Mumbai did not go well with the private developers as it did not prove to be a scheme that will really reap any benefits to them. As a result, the government was forced to set up a specialized team of experts who could sit and discuss the pros and cons of the scheme and work towards the betterment of the scheme. After a lot of thinking and applied expertise, a lot of amendments have been made to the proposed rental housing scheme. The rules have been relaxed to some extent in the favour of private developers. This has resulted in private developers welcoming this scheme with open arms.

To understand the new rental housing scheme, a jargon called FSI has to be understood. FSI means floor space index. FSI is the ratio between the area covered by the building built to the area covered by the entire land area. The FSI for all property projects in Mumbai under public private partnership is expected to be between 3 and 4 now. By the earlier scheme, it was only 3. In order to get a higher FSI ratio, the property developers have to pay 60% of the value predetermined on a table of calculation. This is regarded as a premium value paid by the developers. The private developers are now permitted to build housing units of a larger area. Earlier, the permissible limit was 160 sq ft and now it has been increased to 280 sq ft. This will help the builders use the maximum possible space and convert the area to a profitable avenue.


The idea of offering a higher FSI incentive to the property developers is that the government will ask for housing areas spread over 160 sq ft area free of cost. These areas will be used by the MMRDA (Mumbai Metropolitan Region Development Authority) for the benefit of the low income groups. The state agencies can plan and allocate these houses to people who cannot afford them otherwise. By doing this, the state will serve its purpose to bring about welfare for all.

The scheme comes with the twin benefits of encouraging property developers to indulge in a lot of projects and getting the houses for free and allocating it to the lower income groups.

The revised scheme has on one hand has helped in infrastructural development by providing basic amenities and on the other hand, it has helped two ends meet for the lower income groups. Since, now the Mumbai property developers can sell 75% of the houses built and keep 25% of the houses for rental purposes, it has become a win-win situation for the developers and the government. The property developer’s motive of profit making and wealth generation has been taken care of and the government’s motive of promoting public welfare is also fulfilled. The changes made to this scheme have proved to be a blessing in disguise. Though the scheme faced a lot of disapproval and rejection in the beginning, it is readily accepted now.

About the Author: Arul is a passionate blogger and freelance writer. He has written for many reputed news papers and magazines on lifestyle, travel and news related articles. He is a keen follower of finance and Mumbai real estate market trends.


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