Transferable Development Rights (TDR) in Construction or Real Estate?

March 26, 2024 in Property Guide

Transferable Development Rights (TDR) in Construction or Real Estate?

Once you decide to buy a house, you should consider many factors and not just jump to a final decision. Consider the type of house, available space, and neighbourhood you want to live in while choosing a house. Now that buying homes in India isn't that affordable, financing options should also be considered.

Regarding financing, home buyers also check the different types of loans from various lenders for purchasing a home. They approach a reputable realtor who provides some of the best quality projects at the most affordable rates. You must have exceptional negotiation skills once you plan to work with a realtor. To stand on your negotiation grounds, you must be familiar with your rights as a buyer.

In the real estate sector, TDR (transferable development rights) plays a significant role. Let's understand what it means.

What is TDR in Construction?

Transferable development rights are zones that protect specific lands with a conservation value. Such grounds include farmlands, cultural and natural resources, and open community lands.

Concerning real estate, transferable development rights refer to rights that enable the developers to develop over the permitted floor space index (FSI). It is done in respect of a neighbourhood or a specific land upon which the construction will occur. This offers protection to the landowners and also benefits them in several ways.

Benefits of TDR for Landowners

Through transferable development rights, landowners who do not want to develop a specific part or all of their land will be eligible for receiving certain compensation. These landowners will get an option for legally dividing their development rights with the municipal corporation. Notably, fair compensation should be given to these landowners.

Moreover, the value of such properties will also be enhanced once the transferable development rights are levied. Without TDR in real estate, using the land for regrowth or redevelopment is almost impossible.

How Does TDR Work?

The TDR is a certificate that a property owner receives from the municipal corporation suggesting that the specific property is available for public use. Some prominent public services for which the property can be used include roads, schools and gardens. The owner may also gain some reserved rights over the upcoming property.

TDR allows the transfer of a person's property to municipal corporations using the certificate. Not only does it help shorten the transfer process, but it also helps in acquisition. To better understand TDR, let's consider an example.

Let's take the example of Mumbai. This urban city already has developed areas like Juhu, Andheri and Colaba. The rapid urbanisation and growth across the city have led to congestion. The municipal corporation is now shifting its focus to less developed areas like Mira Road and Navi Mumbai to promote construction. Through TDR, properties are being constructed on the lands turned in by the owners in return for the reserved rights. This helps in promoting growth in Navi Mumbai and booming the real estate sector.

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Purpose of Transferable Development Rights

Acquiring land for constructing public-use facilities in urban areas has become quite difficult today. Not only is it time-consuming, but also very complicated. Therefore, constructing parks or roads becomes difficult for the municipal corporation. Things eventually become easier when there is a TDR certificate over a piece of land. With this, the municipal corporation already has information regarding the properties that can be used for such activities. Using these certificates, land acquisition becomes simple, too.

Advantages of Transferable Development Rights

With the help of TDR, everyone receives certain benefits. The landowners and developers get several benefits from these Transferable Development Rights.

The landowners will receive fair compensation every year for maintaining the property. On the other hand, the developer will have the option to utilise the property under the transferable development rights. The public can also benefit in terms of increasing housing options. The lands under TDR are thoroughly protected by some of the important bodies like:

  • Rural farmland preservation boards
  • Municipal open space programmes
  • Land trusts

Some of the other major benefits of TDR in construction include the following:

Flexibility

The transferable development rights promote land growth across different sectors. Through the transferable development rights, residential and non-residential areas will observe a rise in real estate. Landowners in these areas may also benefit from TDR in real estate.

Available Funds

Through TDR in real estate, private funding becomes possible for land protection. This is applicable in terms of real estate development projects. This way, there won't be any need to rely on government financing options for the development and the optimum utilisation of any piece of land.

Types of Transferable Development Rights

Some of the most prominent TDRs in real estate are as follows:

Slum TDR

The Slum Rehabilitation Authority has provided approval for the Slum Rehabilitation Project. Slum TDR enables the developers to build housing options for slum dwellers under the slum rehabilitation schemes.

Reserved Plots TDR

Regarding a reserved plot, the owner can build a compound wall over a certain part of the property and return the rest to the municipal authority. A printed Development Right Certificate for the respective property will be given to the landowner. This will apply only to the reserved property.

Heritage TDR

If any historic building has an owner, they will receive a Heritage TDR certificate to cover up for the loss to the property. It is authorised with the approval of the state government.

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Conclusion

Before starting the construction of any project, the real estate developers must comply with all the rules and regulations. They can check the laws and regulations concerning the Transferable Development Rights. Complying with the TDR helps to enhance the project's authenticity and usability. If you plan to get 2 BHK Flats in Ahmedabad, you can consider realtors like Adani Realty for the same.

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Disclaimer

The Adani Realty expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this Blog. The content of this blog is collation of data from various sources and is provided only for information purpose only and Adani Realty does not canvass the particulars, information, brand or any other materials mentioned in the blogs nor does it obtain any monetary benefit from the same.The Adani Realty shall in no circumstance be held liable for any expense, loss or damage including, without limitation, direct, indirect or consequential loss or damage, or any other expense, loss or damage whatsoever arising from the use of data, information, interpretation, judgement or opinion arising out of or in connection with the use of this Blog. Reader is advised to read and apply his/ her intellect and discretion in this regards.

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