The real estate landscape in Maharashtra is on the cusp of a significant transformation. In a major move, the Maharashtra government has officially proposed a separate, dedicated RERA-like law specifically for regulating real estate redevelopment projects. This pivotal change, outlined in the new Maharashtra Housing Policy 2025, aims to address the distress of thousands of flat owners and bring much-needed accountability to this crucial segment of the market.
Why a New Law is Crucial: Closing the RERA Loophole
The primary catalyst for this proposal is a critical regulatory gap: the existing Real Estate (Regulation and Development) Act, 2016 (RERA), does not cover the redevelopment component of housing projects.
The Challenge of Redevelopment
In Maharashtra’s urban centers, particularly Mumbai, numerous old buildings—often two to seven stories high—are undergoing redevelopment. This process involves:
- Demolition: Tearing down the old structure.
- Construction: Replacing it with a modern, higher-density building.
- Benefits to Residents: Original flat owners receive new, often larger, apartments free of cost.
- Developer Model: The builder profits by selling the excess units in the open market, while the government earns revenue by selling additional FSI (Floor Space Index).
MahaRERA’s Stance Confirms the Need
The industry regulator, the Maharashtra Real Estate Regulatory Authority (MahaRERA), has consistently ruled that it lacks jurisdiction over the redevelopment component.
Key Example: In December 2022, MahaRERA explicitly disposed of a complaint from homeowners in a Mumbai redevelopment project, stating the matter was outside the RERA Act’s purview and advised them to approach other authorities. Since its inception in May 2017, MahaRERA has handled approximately 30,000 complaints, but many from redevelopment projects could not be addressed.
Also Read – New Maharashtra Housing Policy 2025: A Separate RERA-Like Law Proposed for Redevelopment
Stopping the Stalling: Addressing Homeowner Distress
The core issue highlighted by the Maharashtra Housing Policy 2025 is the severe financial and mental distress caused by stalled projects.
The new policy formally states: “The RERA Act does not apply to redeveloped properties. A separate law is necessary to regulate such redevelopment projects and properties.”
The Cycle of Delays and Suffering
Redevelopment delays are a persistent pain point:
- Financial Burden: Flat owners are often forced to move into temporary housing (transit camps) or rely on monthly rent payments from the developer for accommodation.
- Developer Default: A common and devastating issue is the developer stopping the payment of residential rent, leaving families without a home or income source.
- Policy Justification: The policy explicitly mentions that projects “either do not commence or get delayed, which results in financial, social, and mental distress for the flat owners.”
A dedicated law would enforce stringent regulation, ensuring projects adhere to timelines and protect the financial interests of the original residents.
A Policy for Revival: Key Initiatives
The new policy, approved by the cabinet in May 2025 and further solidified by a Government Resolution (GR) on July 23, is one step closer to implementation and includes other transformative measures:
- Focus on Cluster Redevelopment: The policy promotes a cluster redevelopment model as a targeted measure to revive stalled real estate and slum redevelopment projects, aiming for greater efficiency and scale.
- Empowering Self-Redevelopment: The policy strongly pushes self-redevelopment, where cooperative housing societies take charge of their own projects.
- To support this initiative, the state has allocated ₹2,000 crore and proposed the formation of a dedicated cell to assist societies.
This shift signifies the government’s commitment to creating a safer, more transparent, and faster redevelopment process in Maharashtra.
What’s Next for the Industry?
The proposal for a new RERA-like law is a game-changer for real estate investors, developers, and especially existing homeowners in Maharashtra. It signals the end of the current regulatory vacuum and promises greater protection for citizens who invest their trust in redevelopment projects.
The industry now awaits the drafting and implementation of this separate law, which is expected to revolutionize how urban renewal is conducted in the state.
News Source – Hindustan Times
