The Maharashtra government has been successful in paving the way for providing ‘Housing for all’ by setting up of Slum Rehabilitation Authority (SRA) flats. It is to be seen if the other state governments will employ the same methods to enhance the living standards of slum dwellers. 99acres analyses the process of buying SRA flats as well as the risks involved in the purchase.
Rakesh Kumar, 30, plans to buy a SRA flat of 300 sq ft in Hanuman Nagar, Kandivali East and is keen to know the procedure and risks involved in buying such a flat. Rakesh is not alone in his pursuit of this information. Several people in Mumbai are not even aware of such housing options. Some of them even want to claim home loan for the same.
Let’s begin by defining what is an SRA flat and how is it different from any other flat.
What is an SRA flat?
Slums are a vital part of Mumbai city’s landscape. "Around 60 percent of the population is expected to be located in slums in Mumbai", says Vipin Nayak, a Mumbai-based real estate consultant. In order to enhance the standard of living, the Maharashtra Government formed a committee in 1995 to develop a scheme to rehabilitate slum dwellers. The main aim of setting up an SRA flat is to provide slum rehabilitation. The slum dwellers jointly agree to a redevelopment of the slums and notifies the government to undertake the reconstruction project. The government then works with a private developer who is shortlisted on the basis of a successful bid.
Veena of a Mumbai-based local brokerage, Veena Estate, explains that usually two types of construction is undertaken as part of the SRA project - one for the slum dwellers who get the place in return for surrendering their existing homes of which the configuration is around 300 sq. ft. The rest of the portion goes to the builder who can sell these housing units to buyers, like in the case of any other flat.
According to rules and regulations issued by SRA in its official website, the following points are mandatory:
- Once the beneficiaries are allotted a property, they cannot sell as there is a lock-in period of 10 years. The same rule applies to the builders.
- In case any transaction happens after 10 years, the state government is entitled to get a share of the sale value. This is known as a transaction fee and will be deemed necessary in the registration of the documents of sale. The fee will be equal to the maximum stamp duty on the property, or Rs one lakh, whichever is more. For industrial and commercial tenements, the cap for transfer fee will be Rs two lakh and Rs three lakh, respectively.
- The buyer is required to submit a domicile certificate for purchasing an SRA flat. He or his family members should not own a house within Brihanmumbai Municipal Corporation (BMC) limits. In addition, the buyer and the original seller is not entitled to buy any SRA flat.
- The buyer should belong to Economically Weaker Section (EWS), Lower Income Group (LIG) or Middle Income Group (MIG). The sale deed will be made in the name of both husband and wife, wherever applicable. No partnership firms or organisations will be allowed to purchase SRA homes.
Home loan for SRA flats
Experts point out that home loan can be available for purchasing an SRA flat only when the lock-in period is over and all relevant approvals with respect to construction are in place.
“There is no special procedure to apply for a home loan. It will be treated as any other home loan. The due diligence team will ensure all the background check is done like no outstanding loan, etc. In addition, approval is required from the SRA authorities,” says Muralidhar, a Bangalore-based financial consultant.
Checklist while buying an SRA flat
- The most important thing to check is the deed title of the property. The property title deed is the legal document which proves the ownership of property. You should make sure that the title deed is solely in the name of a seller and only he has the all rights to sell it.
“It is best to consult a lawyer to ensure there is no loophole in this document,” shares Muralidhar.
- “Always check if the property owners have obtained a release certificate from the bank. This will help to check if they have paid their amount due with the lending bank,” he adds.
- A duly-stamped sale deed is required to pass on the ownership of the property. You will not be entitled to own the property in the absence of a sale deed.
Although this seems to be a lucrative housing option, however, there is a lot of risks involved in buying SRA flats.
Nayak shares that one-third of all SRA flats is illegally occupied. The slum dwellers have either sold or rented their flats as soon they get possession in order to gain profits, which is against the SRA norms. All the rules and regulations are just on paper and the authority does not conduct any background check.
Buyers who cannot afford homes in the city buy these flats illegally through the way of the power of attorney instead of a sale deed in which they sign a mutual understanding affidavit of transaction done between them. One needs to keep in mind that a buyer is not eligible for a home loan in this type of transaction, he adds.