Maharashtra Reforms Century-Old Pagdi Rental System with New Framework to Fast-Track Mumbai Redevelopment

The Maharashtra government has reportedly announced a comprehensive regulatory framework aimed at overhauling the decades-old pagdi tenancy system in Mumbai. Deputy Chief Minister Eknath Shinde has unveiled the new policy, which seeks to address long-standing disputes between tenants and landlords while enabling faster redevelopment of thousands of dilapidated buildings across South and Central Mumbai.

Understanding Mumbai's Traditional Pagdi Rental Model

The pagdi system in Mumbai for tenants and landlords originated during the pre-Independence era. Under this arrangement, tenants reportedly pay a lump sum amount to landlords and then occupy properties for generations at minimal monthly rents. While the Rent Control Act has granted strong occupancy rights to tenants, landlords have retained ownership of the properties. This dual ownership structure has reportedly created significant legal ambiguities, leading to what industry observers describe as redevelopment paralysis across the city.

Urgent Need for Policy Intervention

According to government sources, Mumbai currently has thousands of pagdi buildings that are over 60 years old. Many of these structures have been deemed structurally unsafe and unsuitable for modern habitation. The structural safety concerns in old buildings have made reform imperative for urban planners. Previous redevelopment attempts have reportedly stalled due to disputes over tenancy rights, compensation frameworks, and the absence of a unified policy approach.

The situation has also resulted in more than 28,000 pending legal disputes between tenants and landlords, which have overwhelmed lower courts and significantly delayed Mumbai's urban redevelopment initiatives.

Key Provisions of the New Regulatory Framework

FSI Allocation Guidelines

Under the new framework, tenants will reportedly be entitled to redevelopment space equivalent to their existing units. The policy on FSI in Mumbai and floor space index rules will allow landlords to receive FSI allocation based on their land ownership rights. Additionally, incentive FSI provisions will support the construction of cost-free housing units for economically weaker sections and low-income groups, aligning with Maharashtra's affordable housing targets for 2030.

Transferable Development Rights Provisions

The framework reportedly addresses situations where full FSI utilisation is not possible due to height restrictions or other regulatory constraints. In such cases, the unused FSI portion will be granted as Transferable Development Rights. This provision builds on Mumbai's existing TDR policy framework and aims to provide flexibility to developers and property owners.

Continuation of Existing Redevelopment Schemes

Government officials have clarified that existing redevelopment schemes under DCR 33(7), 33(9), and similar provisions will continue to operate alongside the new regulatory system. This ensures that ongoing projects involving redevelopment of housing societies in Mumbai will not face disruption.

Fast-Track Legal Resolution Mechanism

To address the massive backlog of tenant-landlord disputes, the Maharashtra government has proposed the establishment of dedicated fast-track courts. Sources indicate that the administration aims to resolve all 28,000+ pending cases within three years, subject to approval from the High Court. This initiative is expected to provide clarity on landlord rights and rental laws in India while also protecting tenant interests.

Anticipated Impact on Mumbai's Real Estate Landscape

Accelerated Project Execution

Real estate analysts suggest that developers will now have access to clear guidelines, making redevelopment projects more viable and legally secure. This clarity is expected to contribute to Mumbai's ongoing redevelopment boom and housing supply transformation.

Enhanced Legal Certainty

The unified policy framework is expected to reduce ambiguity surrounding compensation structures, tenancy rights, and ownership claims. Industry stakeholders believe this will strengthen homebuyer rights under existing regulatory frameworks while providing fair treatment to all parties involved.

Urban Renewal and Housing Supply

The revamp of old pagdi structures is anticipated to significantly boost Mumbai's housing supply, improve building safety standards, and modernise the city's aging housing stock. This initiative complements the state's broader vision under the Majhe Ghar Majha Adhikar housing policy aimed at delivering millions of affordable homes.

Balanced Stakeholder Outcomes

The framework reportedly ensures that tenants receive secure homes, landlords obtain fair value for their properties, and developers gain execution clarity. Similar approaches have reportedly yielded positive results in projects such as Hiranandani's housing society redevelopment in Chembur.

A Turning Point for Mumbai's Urban Evolution

Maharashtra's decision to overhaul the pagdi system represents what many observers describe as a critical turning point in Mumbai's urban development trajectory. By addressing long-standing legal and structural challenges, the new policy reportedly lays the foundation for large-scale, equitable redevelopment that benefits all stakeholders. The initiative is expected to contribute to the transformation of Mumbai's housing market while modernising one of India's oldest rental housing legacies.

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