How TDRs (used to) work in Bangalore

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In this article I shall explain what is TDR, why was it introduced in Bangalore, how TDR used to work and what is the current situation of TDR.

What is TDR

TDR, which stands for Transfer of Development Rights, was first introduced in Bangalore by Bangalore Development Authority (BDA) in Revised Master Plan (RMP) 2015. TDR is an innovative concept that refers to the grant of additional built-up area to the landowner in lieu of land relinquished or surrendered by him to the government for public purposes such as road widening, new road construction, building public parks or civic amenities.

Purpose of TDR

Government usually faces stiff challenges with land acquisition in cities and towns. On top of that civic agencies agencies are cash strapped to fund infrastructure development projects within cities. Hence in order to incentivize landowners to surrender lands to the government and that too without agencies doling out cash, TDR was formulated to grant additional built-up area to the landowner. TDR either can be utilized by the landowner on the same land, a portion of which was surrendered, or can be transferred (sold) to others (mostly builders) for exchange of money.

BDA & BBMP have utilized TDR route to make land acquisition simple and cost-effective in the last decade.

How TDR Works

As mentioned above the landowner who surrenders his or her lands to the government for public purposes is awarded TDRs in the form of DRCs (Development Rights Certificate) which he or she may use it for himself or transfer it to any other person or entity.

As per the previous rule the landowner was awarded 1.5 times of the land area surrendered as DRCs i.e. if the landowner surrendered 100 sq. mts. of land to the government, say for road widening, he was awarded 150 sq. mts. of TDR in the form of DRCs. The landowner can either choose to build additional area on his remaining portion of the land or sell it to any other person or entity subject to below conditions:

  1. The DRC shall be valid for a period of 5 years. However, the same will be revalidated for a further period of 5 years. However, the DRC shall lapse after expiry of 10 years.
  2. TDR is allowed to be utilized in multiples of 10 sq. mtrs only, except the last remainder.
  3. The plot receiving the TDR should abut a road not less than 12 meters wide.
  4. DRCs issued in different city zones have an utilization formula. Based on the intensity of development, the city is divided into intensively developed (A-zone / Ring I), moderately developed (B-zone / Ring II) and sparsely developed (C-zone / Ring III) zones in the plan. E.g. to build 1 sq ft of additional area in Ring I two sq ft of DRCs of Ring III is required.
  5. A maximum area of 60% of available FAR can be built on the receiving plot subject to setback norms. Setback is the space left on all the four sides of the Plot during construction.

Unfortunately, this last point led to (re)development of high-rise projects on smaller plots in city centres leading to resentment among residents and fire department.

Misinterpretation of TDR

As per BDA’s RMP 2015, TDR loading allows 50% relaxation on setback norm. However, what is not explicitly mentioned is whether the relaxation is on total setback or on the incremental setback requirement. Just to explain:

Say for a given plot with the available FAR, the builder can construct 10 floors (~30 m) leaving a setback of 10 meters on all the four sides of the plot. Below is the table of setback requirements as per BDA RMP 2015.

As per the above table a setback of 10 meters is required for 10 floors apartment. If the builder decides to load maximum possible TDR i.e. 60% of FAR available technically he should be able to add another 6 floors. So as per the above table a 16 floor (~48 m) apartment will require a setback of 14 m. However, RMP 2015 allows a 50% relaxation on setback which ideally should mean relaxation on incremental increase of setback i.e. 4m (14m – 10m) i.e. a setback of 10m + 2m = 12 m. However, the authorities took a favourable view and allowed 50% relaxation on the entire 14m i.e. setback requirement of just 7m which is a clear violation of existing building norms.

Why authorities chose to do is unclear. TDRs are primarily used in Central Business District or Secondary Business District where land supply is very less, only smaller land parcels are available, is well-developed and land cost is very expensive. Builders can make money in such projects only by way of TDR loading i.e. buying TDRs / DRCs and utilizing available additional built up area to construct more on these plots. However, in a smaller plot, which is generally available in CBD & SBD, a higher setback requirement will make it difficult to construct additional floors and hence prohibit consumption of TDRs and make it less attractive for builders to make money.

Repercussions

A TDR policy favouring builders led to redevelopment of several old bungalows and low rise apartments in city centres. But it also led to serious resentment among old residents of the locality who were troubled and angry with high rise apartments invading their privacy and making the place more crowded. Also as I said earlier it is technically wrong on the part of BBMP to give a 50% relaxation on the entire original setback requirement. Fire department objected to it as well. Finally BBMP put on hold plan approvals in cases where TDR was applied.

Current Situation

BBMP has not sanctioned even a single project with TDR (with relaxation) in the last 18 months. Hundreds of projects with TDR files are stuck with the government agencies and builders who bought lands and / or TDRs are bleeding due to this. BBMP had announced a new version of TDR conversion based on guidance value of land receiving TDR, however this model was rejected by CREDAI (Confederation of Real Estate Developers Associations of India) as unviable for builders. It is important to have a favourable response from builders as they are the eventual buyers of TDRs issued to landowners.

Hopefully government comes out with a new TDR policy which is a win-win for all the stakeholders – landowners, builders and society at large!

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