TDR Policy

New TDR policy to bring down property prices

Mumbai: Property prices are set to come down, with the state deciding to increase its share in the Transfer of Development Rights (TDRs) market from 0.33 to 0.67 in the suburbs.
In other words, the government has restricted the land available with private builders for TDRs. The amended TDR policy will be released soon. Though widely seen as a pre-poll sop, many developers have welcomed the move.
The rise in the state government’s share in the TDR market will bring more revenue into its kitty and also the Brihanmumbai Municipal Corporation (BMC). The civic body can utilise this earned revenue for various infrastructure projects.
What exactly is TDR?
TDR means Transfer of Development Right. Supposing you own some property in Borivli. If the government declares it as reserved land (either to be used as a garden or as a heritage property), you may lose control over that property. But the government will compensate you by issuing TDR. Though the government generally issues TDRs on reserved land, it can issue TDRs on other land also, if it wants.
How will it help?
TDR will enable you to sell to builders an equal area of the land you’ve lost. Only, this is a virtual space market. Here, you are actually not selling land that you own, but selling an equal area of virtual space for real space lost. You’re selling a certificate and getting compensated for the land lost. When builders start selling and buying them, an open market is formed.
How will increase in TDR reduce prices?
Earlier, the government’s share in the TDR market used to be 0.33 and the open market share was 0.67. Since the bigger percentage was with private players, the government had lesser control over prices. Private TDR holders used to increase prices artificially and manipulate market. By reversing the ratio, the government will have a better control of the market and real-estate prices.