How ill-conceived land regulations have choked Mumbai
In the first of three articles examining Mumbai's housing market, Sharmeen Contractor and Shilpa Rao explain how badly designed land regulations have backfired time and again, ballooning the price of land and forcing millions into the informal sector.
Sharmeen Contractor and Shilpa Rao
Mumbai sits on 603 km² of land, packing a density as high as 20,000 persons per square kilometre. One would think the typical constraints of an island city would enforce the optimum use of land, yet over the decades poor land management has restricted formal growth in the city and lead to an unbreakable nexus between politicians and real estate firms.
Politicians' efforts to keep both urban poor vote-banks and the colonies of the rich and famous intact are actively damaging any real chance at addressing land ownership and land use for the city as a whole. Modifying development control regulations and tweaking vertical growth limits "on a need basis" have become commonplace, acting as plush rent-seeking avenues.
A complete void in constructive urban planning has lead to an indiscriminate proliferation of slums, now housing 62% of the population! Land, both by accident and design has become the scarcest and thus the most expensive commodity in Mumbai, resulting in impossibly unaffordable housing. Why are we in this situation today?
A litany of failed regulations
In 1977, the Maharashtra Housing and Area Development Authority was set up to create affordable housing for all socio-economic groups in the state of Maharashtra, where Mumbai is located. Initially blessed with 1,762 hectares, the authority has now lost control of all but 7 per cent to cronies and real-estate firms, with much super luxury housing for the top 5 percentile of the city being built on land originally earmarked for affordable housing.
Unable to escape a similar fate are the mill lands. Once industrial powerhouses, these properties are now defunct due to increased competition and their inability to keep pace with advancing technology. Occupying 240 hectares within the city centre, most have shut down. Zoning laws were reclassified to regain access to these lands, with a modification to Development Control Regulation 58 redistributing land between mill owners, the municipal corporation and the state housing authority who would have used it to build affordable housing. But, shockingly, an amendment was introduced, which transferred far more solely into the hands of mill owners who went on to auction them on the open market. Some of these lands have sold for as high as 300 million USD for 3.4 hectares! This has had an immediate domino effect on property prices throughout surrounding areas, pushing affordable housing further out of reach.
In the 1960s the Urbal Land Ceiling and Regulation Act was adopted to prevent concentration of urban land in the hands of the rich and make it available for public purposes. Yet the government took control of barely 10% of the land placed in its possession, much of which has succumbed to large scale encroachment. The Act was officially repealed in 2007, meaning that 731 hectares will be returned to their original owners to do with as they please, though this has not been without becoming another long and drawn out legal battle.
Another tricky policy instrument is the Coastal Regulation Zone, which restricts development in coastal areas on environmental grounds. Not only has this artificially limited the supply of physical land, but these 'restricted' areas have become open grounds for slum encroachments. While some few areas are indeed sensitive and do not merit further development, this law needs to be rationalised in accordance with the city's needs.
Adding to the confusion is the anachronistic Rent Control Act. Due to the strict protections offered to tenants, landlords and investors are discouraged from investing in rental homes, given that it is bound to be a sunk cost. It is suggested that this Act holds up development of up to 500 hectares, creating an artificial scarcity of land and housing in the market.
Due to this dwindling physical land bank, Mumbai is now forced to depend on the creation of a virtual land bank through additional floor space allowances. For years vertical growth has been severely restricted due to fears that this will attract more people and the city's infrastructure is not ready to support them. However, now the Floor Space Index (FSI) is being used as a currency rather than a zoning tool. Additional FSI of up to 4 is being 'sold' at exorbitant rates to developers in return for public amenities like 'parking lots' (among many other silly things). Because of this rule, in downtown Mumbai you now find more parking lots than cars in locations that have absolutely no need for them.
Consequently Mumbai has a haphazardly rising skyline (with dozens of buildings as high as 40 floors) with absolutely no supplementary increase in water, sanitation and transport infrastructure. To an external observer, it almost seems that civic authorities are not really interested in restricting vertical growth, but merely want to retain these regulatory instruments as a means of political funding.
A single framework
Land is the crux of all real-estate woes in Mumbai today. Skyrocketing prices have made home ownership impossible for the majority of the population. Neither has rental housing been given a fair chance, forcing people to arrive at their own ingenious 'shanty' solution to cope with the mess — a shame on the civic authorities.
Now more than ever there is a need for a constructive and rational master plan for the city — the last one was made in 1995. Land management policies serve their purpose effectively only if they fall within a larger framework of master planning which works towards a common goal. What we are left with now is a set of policies which on their own serve specific and important purposes, but when seen together often contradict each other entirely. Rent control, FSI, infrastructure, transport and housing are all parts of the same problem. Unless seen together, even the most well-meaning policies can have disastrous consequences.
Of course we understand that there can be no room for ideas when the political elite continue to be blind to the consequences of these policies on the common man. The current Chief Minister — appointed in November after his predecessor's involvement in a land scam — has been cracking the whip on many of these regulations. We strongly hope that he survives his term to see through these policy changes.
In the following weeks we examine the consequences of these policies more clearly — the proliferation of slums, and the government's attempt to rehabilitate them.
