Stalled housing redevelopment projects leave Mumbai residents in limbo

Ageing housing societies that were promised bigger, modern living spaces have seen builders abandon or stall construction for years, with little recourse.

In 2010, two different housing societies in Mumbai opted for redevelopment around the same time. Jeevan Nagar Co-operative Housing Society in Mulund was a sprawling community of 27 two-storey tenements, home to over 270 families, spread around a playing yard within a five-acre plot. The ageing buildings needed a rebuild. In their place, two brand new towers of 38 stories each, offering a 50% higher carpet area and a clubhouse, were promised within four years. But gross mismanagement and poor execution by the builder plagued the project from the start.

For three years, the project remained stuck in approvals. Work began in 2013 but soon stalled as the builder faced a cash crunch and defaulted on a loan. Residents, initially allowed to remain on the premises, eventually had to vacate as conditions became unsafe. Despite a Real Estate Regulatory Authority (RERA) complaint and termination notice, the site remains abandoned with only a third of the work completed.

For former resident Sai Prakash (name changed), 37, it was an ancestral home inherited from his grandfather and filled with memories of his joint family. After vacating in 2021, he now lives on rent with his wife and his kid, while the money paid for extra space in the redeveloped building remains locked. “Not only is my ancestral property gone, but I also cannot even afford a new home for my family,” he rues.

Residents of Juhu Anamika housing society in JVPD Scheme, Juhu, are also in limbo after being hung out to dry by two developers. Their building was demolished in 2010 with the promise of homes in a 16-storey tower within 37 months. Instead, the builder halted work and stopped paying the promised rent. A dispute over sharing benefits from additional floor space index (FSI) followed, and the builder sought termination of the agreement in 2017. Another builder stepped in with an offer of a higher carpet area in 2020. Residents found a new ray of hope. But the optimism proved short-lived.

First, the onset of the COVID pandemic prompted the builder to enforce the ‘force majeure’ clause in the agreement, putting a halt on construction and rent payments. Later, installation of a new radar at a nearby military transmitter station prompted the Airports Authority of India (AAI) to put restrictions on the height of buildings in the vicinity. This spooked the new builder.

However, the builder didn’t surrender the project either. Meanwhile, other under-construction buildings in the area have continued work. The AAI has since offered relief on height restrictions, but the builder continues to keep the society members dangling, seeking concessions in revised consent terms. Today, only a sunken pit remains at the construction site.

The harrowing ordeal has taken an emotional, physical and financial toll on the families. Not getting rent for many years has left many financially weak at a very difficult age. “Our surviving members are mostly senior citizens, many of whom have developed serious age-related health issues. Some have passed away with unfulfilled desires of coming back to their flats,” laments 64-year-old Nita Bhagwat (name changed on request), a former resident of Juhu Anamika.

A widow, Bhagwat, lost her younger daughter soon after vacating her flat in 2010. Without a home of her own, she has since shifted several times, moving towards the city’s peripheries to save on rent. Her married elder daughter, who lives abroad, supports her financially.

Even after 16 long years, families from the two housing societies remain unsure whether they will ever get their homes back. Their predicament highlights the risks that can accompany housing redevelopment.

In such redevelopment projects, members of ageing or dilapidated housing societies decide to rebuild, appoint a developer and move back after the construction is complete. In return, the developer gets additional construction rights, which allow it to build and sell extra flats to fund the project and earn a profit. This is distinct from builder-driven redevelopment, where developers approach even structurally sound societies to tap their unused FSI. This story focuses on ageing societies seeking developers to rebuild their homes.

The sobering reality

Society redevelopment has become a structural necessity in dense urban habitats like Mumbai, crippled by scarcity of land and ageing buildings. Over 1,094 societies in Mumbai are currently undergoing redevelopment, according to a report by Knight Frank India. Nearly 432 acres of land are waiting to be unlocked, estimated to add 59,000 new units to the housing stock.

Homeowners in ageing, dilapidated societies see redevelopment as a pathway to a better lifestyle—safer homes, bigger living spaces, modern amenities and more parking. Builders, meanwhile, see an opportunity to unlock value and make a tidy sum by selling the extra inventory. They often mount a charm offensive with glitzy pitches and tall promises of larger carpet areas, generous rental payouts and fat corpus funds.

But for many embattled housing societies, the protracted wait for their homes suggests this path is paved with sleepless nights, as residents are left at the mercy of developers, without homes for years and forced to live in rented accommodation.

Redevelopment today is far more complex than it was a decade ago, admits Nachiket Bhatwadekar, Managing Director, Residential Services (West) at Colliers India. “Rising construction costs, tighter funding, regulatory approvals and changing market conditions have all made execution more challenging.”

Gulam Zia, International Partner, Senior Executive Director, Knight Frank India, maintains, “Redevelopment is inherently complex, involving multiple approvals, financing, legal clearances, and consensus among dozens or hundreds of members. Delays are often rooted in title issues, approval timelines, and litigation, all of which can drag a project for years.”

Every redevelopment project runs on the same basic math. Once the builder rebuilds enough area to give existing members their promised flats, whatever additional buildable area the project allows — sanctioned through extra FSI or TDR — becomes his to construct and sell to new buyers at market rates. This free-sale component is what funds the project and delivers the builder’s profit; there’s no separate pool of money. The feasibility of any offer ultimately hinges on how much buildable area can be given to members without making the project unviable for the builder. Problems arise when builders overpromise to win a society’s mandate, betting on rising property prices to bail them out later. When property cycles turn, as they inevitably do, those aggressive offers stop adding up — and that’s usually when the stalling begins.

The duration of a typical redevelopment project, from initial society consensus to final handover, spans 8-10 years, according to a Knight Frank report. This represents a commitment across at least one full real estate cycle, often involving shifting market conditions, interest rates, regulatory norms, and buyer sentiment.

Sonam Chandwani, Managing Partner, KS Legal & Associates, asserts, “In many cases, projects are launched on optimistic assumptions regarding funding, sales and approvals, but delays in permissions, changes in market conditions or liquidity constraints derail execution.”

Missing: Fear of law

For housing societies left in the lurch, taking on the builder can be an exercise in futility. Weak RERA enforcement and slow consumer court proceedings allow errant builders to stretch timelines with few consequences, says Santhosh Kumar, Vice Chairman, ANAROCK Group. “While laws such as RERA have improved accountability, enforcement through litigation or regulatory proceedings can still be time-consuming, allowing delays to continue for years in some cases,” concedes Chandwani.

But housing societies are not without legal remedies, she insists. “Courts and regulatory authorities have consistently held that developers cannot indefinitely delay projects after taking possession of the property. Housing societies are entitled to enforce contractual timelines, seek compensation, terminate the agreement in appropriate cases and pursue remedies before RERA, arbitral tribunals or civil courts.” Even as the legal framework provides remedies, the effectiveness of those depends on how well the redevelopment documents anticipate and address potential risks at the outset.

The right approach

While poor execution by builders is a vexing problem, a part of the blame often lies with the housing society itself. Kumar avers, “Redevelopment is often a nuisance due to weak legal agreements, poor builder vetting and disagreements amongst members that stall decision-making.”

Society members often focus on the financial sweeteners in a builder’s proposal—corpus fund, rent and additional carpet area. But these must be weighed against the builder’s financial strength and execution capabilities. Before appointing a builder, the society should commission and pay for an independent feasibility study. This assesses the plot’s construction potential and costs, providing an unbiased benchmark to evaluate offers.

Zia cautions, “A generous offer means little if the developer doesn’t have the balance sheet or track record to see the project through.” Bhatwadekar insists, “Societies often focus on the highest commercial offer, whereas equal importance should be given to the developer’s financial strength, execution capability and track record.”

Errant builders often get away with delays because of one-sided agreements. Many tripartite agreements lack strict penalty clauses, timelines or termination rights, leaving societies with little recourse, says Kumar. Societies must not rush into signing a Development Agreement and surrendering their homes to the builder.

Chandwani maintains that housing societies are often left in a vulnerable position because they have already vacated their homes and their bargaining power diminishes after possession has been handed over. “Once members vacate their homes, their legal protection depends largely on the safeguards negotiated into the redevelopment documents, making careful drafting and legal scrutiny indispensable.”

Zia says societies should check the builder’s track record and financing, and insist on clear timelines, penalties, exit clauses and financial safeguards. “None of this should be negotiated after vacating; it needs to be locked in before anyone moves out.”

Chandwani adds that agreements should spell out milestone-linked timelines, performance guarantees, delay compensation, rent or alternative accommodation, termination rights and dispute resolution.