Pagdi Buildings may fall under RERA

The government is all set to bring cessed or tenanted buildings as well as tenants of those buildings under RERA Act, 2016, offering the same protection for the first time to such consumers as those are offered to other buyers. The cessed or tenanted buildings dotting the land of a lot of cities, especially Mumbai, having people who have been there for decades and paying artificially depressed and cheap prices. Tenants of Pagdi system are not covered under authority.

The Pagdi system has been followed since pre-independence across different parts of the nation. It is basically a rental system which is just like most of the lease systems. But a crucial difference makes tenant partly an owner of the house, excluding land. There are different issues pertaining to redevelopment and Pagdi and such issues should be considered. Both central and state governments are looking into it, according to a senior official.

Under the existing rules set by RERA, tenants are known as copromoters in these buildings as they are supposed to get part as compensation from the project for their rights. So, they don’t have same rights as buyers. These tenants would be eligible for compensation once fall under RERA, along with other benefits if project is delayed.

There are over 16000 cessed buildings in Mumbai alone, along with Pagdi properties. In these properties, tenants are paying tax to the Maharashtra Housing & Area Development authority, making provision for repair of these properties. A MahaRERA official added, usually, a real estate developer redevelops the whole project in terms of phases and keeps free-sale and rehabilitation separate. This way, they may not be able to register the project with regulator as it is referred as compensation under RERA purview, not a sale.

“Tenants can get protection of RERA required even in current system if they ask developer to book project completely than in phases”, he added. Along with Punjab and Madhya Pradesh, Maharashtra was one of the first couple of states to follow RERA rules. The MahaRERA has been established after all RERA Act, 2016 sections came into existence on May 2017. All projects which have not received OC and sold or marketed should be registered with RERA.