October 07, 2025: The Maharashtra Housing and Area Development Authority (MHADA) has revised how it calculates premiums for commercial space in redevelopment projects under its Mumbai Board, replacing the earlier rule that charged 1.5 times the residential rate for additional commercial floor space.
The move comes after years of appeals from developers and housing societies, who argued that the previous structure made several projects financially unviable. Under the old system, premiums often ranged between 60% and 142.5% of the residential rate, significantly increasing costs and delaying the redevelopment of ageing MHADA layouts.
Under the revised formula, MHADA will now adopt a market-linked, formula-driven approach. The calculation will begin with the Ready Reckoner land value, applying the percentage specified under the Development Control and Promotion Regulations (DCPR) 2034 for commercial usage. This will then be adjusted based on the current market prices of residential and commercial properties in the area. Officials said this ensures that premiums better reflect actual land value rather than a fixed multiplier.
According to MHADA officials, the updated system aims to simplify premium computation, improve predictability, and ease financial strain on both societies and developers. The policy is expected to make several stalled or delayed redevelopment projects financially viable again, enabling faster renewal of old MHADA housing colonies across Mumbai.
Developers have welcomed the move, calling it a step toward greater transparency and fairness. They believe the change aligns valuations with real market demand, enhances investor confidence, and could ultimately help increase the city’s housing supply.
The revision is part of the state government’s broader effort to streamline redevelopment policies and support Mumbai’s growing need for affordable and modern housing.
Source: Times Property
