The Maharashtra government’s move to announce a waiver on interest of 8.5% charged for paying the premium over three years for self-redevelopment projects in Mumbai and other parts of the state is being seen as a progressive step toward urban renewal, providing housing societies with greater autonomy in redevelopment while reducing financial strain.
Industry experts believe that the new policy will particularly benefit societies occupying plots smaller than 800 square meters with high FSI consumption, which constitute a large portion of Mumbai’s redevelopment landscape.
Taking to social media, Fadnavis stated, "Excited to announce that housing societies undertaking self-redevelopment will now be exempt from paying interest on the premium for the first three years—an initiative that will bring financial relief to many. This exemption will apply to all projects in the first phase, until March 2026. Additionally, we have introduced cluster self-redevelopment as a solution for chawls and established a special committee to spearhead its implementation."
Stating that self-redevelopment projects allow housing societies to undertake the redevelopment of their buildings independently, without relying on external developers, Bamasish Paul, Co-founder, Managing Partner & CEO of Etonhurst Capital Partners, explained that this model empowers societies by ensuring complete ownership, cost-sharing, and revenue retention. However, he noted that challenges such as financial constraints, project management complexity, and the need for consensus-building among members could hinder execution.
"Approval costs and the purchase of Floor Space Index (FSI) form a major component of redevelopment expenses in Mumbai. Developers typically opt for deferred payment schemes that include interest on the premium, while housing societies, restricted from taking loans under their charter, must pay this amount upfront. This often makes self-redevelopment less attractive," Paul said. He added that the waiver is expected to encourage more housing societies to consider self-redevelopment, although a significant portion of projects would still be undertaken by developers due to their expertise in construction, sales, and risk management.
Nitin Singhal, Founder of Absolute Group, emphasized that waiving the 8.5% interest on the three-year premium payment removes a key financial hurdle that previously made self-redevelopment less viable compared to developer-led projects.
"This is a well-calibrated step toward democratizing redevelopment, allowing smaller societies to take charge of their own renewal without relying on large developers. However, the real challenge lies in mobilizing seed capital and ensuring that societies or professional Development Management (DM) firms have the necessary expertise to execute projects efficiently," Singhal noted.
He further highlighted that many housing societies still lack the financial and technical expertise to navigate approvals, manage construction, and coordinate with key stakeholders, including financial institutions and local authorities.
"Addressing these gaps through structured financing solutions, regulatory support, and professional DM services will be crucial in unlocking the full potential of this policy. Nevertheless, this move marks an important milestone in Mumbai’s redevelopment ecosystem, particularly for smaller societies, making self-redevelopment a more viable and accessible option," Singhal added.
