What are the rules for inheritance of rental rights in the Pagdi system? The Union Cabinet`s approval of the new Model Rental Law on June 2 is causing unease among Mumbai`s 2.5 million tenants, especially those who have rented apartments under the Pagdi system. In 2019, the Maharashtra government allowed a discounted Additional Area Index (FSI) for developers who were willing to take over the redevelopment of Pagdi`s properties. However, this would result in a loss of about 50% of the revenue of the Brihanmumbai Municipal Corporation (BMC) and a final decision on the matter has not yet been made. BMC`s 2018 guidelines state that those who already live in uncontrolled buildings before June 13, 1996 are entitled to new apartments if the property is intended to be renovated. Even if the tenant had officially and legally transferred the property to the new tenant, the new tenant would be entitled to the same benefits. This system was also cheaper because it did not fall under tax laws. But with the new GST law, the Pagdi system will be introduced in the area of services. The GST applies for the rent premium acquired on the transfer of rental rights, provided that the exception is granted in accordance with sl.n° 12 of central tax notice no. 12/2017 (rate) of 28 June 2017 on « Services by rental of residential property intended for use as a residence ». 2) According to the information on the website redevelopmentofhousingsocieties.blogspot.com/..these 2013 guidelines, this will ensure that existing residents of these buildings receive up to 12% more carpet space in their new apartments. Eligible tenants who reside before 1996 under the BMC rules of these buildings are entitled to a carpet area of at least 300 square feet in accordance with applicable regulations. For more space beyond 12%, tenants must negotiate with developers in consultation with landowners.
The « Rentpagdi » system is a form of rental in India where the tenant is also co-owner of the property. This system is common in parts of Maharashtra, Delhi and Kolkata. Read on to find out if the Pagdi system is legal and what is your responsibility if you want to sell a Pagdi property that you may have bought at home for a long time » Must know » What is the Pagdi system in India? Although legalized, this system has many disadvantages for both the landlord and the tenants. Tenants of these buildings under renovation will have their new homes calculated over the entire carpet area of their apartment buildings. In the Pagdi system, the only distinguishing feature is that the tenant becomes the co-owner of the premises and not of the land. This tenant continues to pay rent to the landlord as long as he does not sublet the premises. In addition, the tenant has the choice to sell said property, but the tenant must give the owner a percentage (between 30 and 50%) of the gross amount of the sale. The government is actively pushing for the renovation of entire groups of old buildings, especially in South Mumbai, as this appears to be the only way to redevelop prime tenant-occupied properties under the Pagdi system.
In the case of old housing associations, the new rules prompted a builder to carry out a renovation. This is done in the form of a 15% concession with simultaneous payment of a premium to the BMC for the additional ISP used. For example, if the developer pays the BMC for an additional ISP-TDR 1, they only pay 85% of the total amount of FSI-TDR. This incentive makes the renovation project a little more profitable for the developer. The Pagdi system, a form of leasing, has flourished in recent years, as no lease had to be concluded with the owner until 1999. Rental income took care of the entire process. Year after year, rents would remain the same, as if they had never been affected by inflation. The new Development Control and Promotion Ordinance (DCPR – 2034) now encourages the renovation of these Buildings of the Pagdi System by offering owners attractive incentives based on the total area required to rehabilitate existing tenants.
After the renovation, the tenants become the owners of the apartment. To draw an appropriate conclusion, we need 1. Recognize that this system dates back to the pre-independence era and a time when rent control was essential due to the need for affordable housing after the World Wars. After independence, India was no exception. However, times have changed over the seven decades, and whatever the pros and cons, the agenda is to protect landlords and tenants. There have been many complaints and disputes from landlords and tenants as a result of the Pagdi system, and despite legislative intervention, the government has not been able to resolve the issues and refine and regulate this system directly. A pagdi system is a legal rental system that flourished in the 1940s, in which tenants are partial owners and the rental can be sold after part of the proceeds has been shared with the owner. A new reserve is added to sub-regulation 33(7)(A)(b) provided that, in the case of a composite renovation carried out in accordance with points (a) and (b) above for two or more but not more than five parcels of land occupied by tenants, the FSI incentive is 60% and the user is entitled to 8% additional space of rehabilitation mats and six or more for plots, then the incentive is 70% and the user is entitled to 12% additional rehabilitation mat area. Saroj, 85, inherited a Pagdi rental from his parents. The rents for his 300 m² apartment in Dadar gradually rose from around Rs 35 per month to almost Rs 3000 per month. Residents of the nearby building still pay a rent of only 180 rupees per month.
« I had no choice but to pay the rising rents because I couldn`t leave the house, » says Naik, who has lived there for more than 70 years. 3) RERA would be applicable to the rehabilitation of disused buildings Most of these unposted buildings are located in the western/central suburbs and at present many of them are in a dilapidated state. According to the Pagdi system, the owner is the owner of the property, but ownership of the property belongs to tenants who pay a minimum rent, as these properties fall under the Rent Control Act. However, it is necessary to identify eligible tenants to protect their rights and ensure that they leave the premises without fear when the building is being renovated. Citizens explained that attractive incentives make redevelopment a win-win situation for everyone, as residents get bigger homes and homeowners/developers are encouraged to opt for projects to make good profits. One urban planner said the incentives will help create more housing in the city and provide more open space and amenities, as well as control rising housing inventory prices. Section 7 (15) (d) of the Maharashtra Rent Control Act 1999 provides that the family member of a tenant who was living with the deceased tenant at the time of death first has family law as the successor to the tenancy. After the death of a current pagdi tenant, the rental rights can only be transferred to this legal heir. .