Transfer of Development Rights (TDR)

Transfer of development rights (TDR) is a valuable right permitted by a State Government and is represented by a Certificate from the City Administration stating that the owner of a property has a right to additional Floor Space Index (FSI) at the specified rate in his real estate projects. 

TDR is granted as certificates called Development Rights Certificate (DRC) issued by the Municipal Commissioner.

The certificate states the

  • FSI credit in square metre of the built-up area to which the owner or lessee of the reserved plot is entitled,
  • Place and User Zone in which the development rights are earned, and
  • Areas in which they may be utilised.

Under the TDR policy, owners / builders are compensated in kind by allotment of TDR if they surrender some of their land for developing public utilities such as parks, schools and hospitals or for widening of existing roads or for participation in government sponsored slum development programmes. 

The additional FSI/FAR, can either be used on another plot of land/building in some other part of the city. Or, one can sell the TDR (issued on what is known as the Development Rights Certificate (DRC)) in the market. Many big developers and builders are keen to purchase the DRCs because it legally gives them more FSI. This means that they now have additional built-up area that they can factor into their building plans. The DRC allows the builder to “legally” add more floors to his building. 

TDRs are transferable and are traded among real estate developers. However, the owners of the DRCs are usually unaware of how and where to trade these in the market. As a result, they may not get the best compensation. The various types of TDR are:

  • Road TDR: Granted to owners in lieu of land surrendered for building new roads or widening existing roads.
  • Reserved plots TDR: Granted to owners for surrendering land reserved for public amenities, like playground, market, school, etc.
  • Slum TDR: Granted to owners/developers for surrendering land and redeveloping slums and re-housing slum dwellers free of cost under the Slum Redevelopment Scheme.
  • Heritage TDR: when the original property is public heritage.

Transfer of Development Rights, or TDR, can be thought of as floating floor space index (FSI). The development potential of a plot of land is separated from the land itself and is made available for use in another area or land in the form of TDR. TDR evolved as an alternative to monetary compensation. TDR is granted only for prospective development and not for past developments. 

Maharashtra was one of the first states to implement TDR laying emphasis on road widening as a factor and has since been modifying the rules and regulations in response to the changing situations. Karnataka State Government introduced TDR in 2005 vide section 14 B in the Town and Country Planning Act in 2005. The Chennai Metro Rail Ltd. has offered the property owners the choice of opting for either cash or Transfer of Development Rights (TDR) proportionate to the extent of the land or building that is acquired. In Hyderabad, TDR is offered for developments in the Old City area and for road widening schemes. Kolkata Municipal Corporation offers TDR as an incentive for preservation of heritage properties. 

The Maharashtra Government has used TDR as an incentive to attract developers to the slum development projects by granting Slum TDR. In Mumbai, Cess TDR is given to developers who make improvements on existing dilapidated structures, most of which have been buildings under the Rent Control Act of 1940 and are situated in South Mumbai. In Mumbai, while TDR can originate either in the island city or suburbs, they can only be used in the suburbs, i.e. between Bandra and Dahisar in the western suburbs, Kurla and Mulund in the central suburbs, and between Tilak Nagar and Mankhurd in the harbour line. In the suburbs, it can be used either in the same municipal ward where it had originated or on any plot lying to the north of the originating plot. For example, a TDR generated in Andheri can be utilised in Andheri or in Jogeshwari, Malad and beyond. But it cannot be used in Vile Parle, Santacruz, etc. Many developers have come forward to redevelop slums in Mankhurd owing to the lucrative propositions of carrying our development in areas such as Bandra through the Slum TDR gained by redeveloping the slums. TDR cannot be used in the island city of Mumbai. Likewise it cannot be used in plots falling under the Coastal Zone Regulation, No Development Zones, Tourism Development Zones, in gaothans, and in plots abutting narrow roads as specified in DC Rules. 

In Bangalore, along Hosur Road, institutions such a Baldwins Boys High School and St. Johns Hospital that have open grounds/space have relinquished their properties and availed of TDR. However, places like Johnson Market and mosques around the area have not surrendered space. In any case, these institutions have no open space that can be given up for widening purposes. 

A holder of DRC who desires to use the FSI credit on a particular plot of land must apply for development permission to the Commissioner. When the development is complete, the commissioner endorses the DRC with the quantum of DRs actually utilised and the balance remaining thereafter, if any, before issuing of occupation certificate. TDR can be utilised by the original recipients or transferred to any other person. If a DRC holder intends to transfer it to another individual, he must submit the DRC to the Municipal Commissioner with an appropriate application for endorsement of the new holder�s name on the certificate. Without such an endorsement, the transfer is invalid and the certificate will continue to be in the name of the original holder. 

Property owners and landlords are primarily eligible for TDR. Tenants are least likely to receive compensation. Under the Roads Widening scheme, landlords are responsible for clearing away the tenants before they can come forward to surrender their properties. The government is not responsible for other claimants on the property. This means, for e.g. that in the widening of roads a number of street economies could be wiped out and the claimants will have no legal redress. TDR thereby absolves the government of any judicial proceedings that it could have been liable for by the tenants.


  • Decongestion via congestion? 
    In Mumbai, TDR issued from a ‘sending place’ can be used in ‘receiving areas’ that are to the north of the ‘sending place’. Areas that are already bursting at their seams owing to the burden on their infrastructure could be further congested with the implementation of TDR. The biggest criticism leveled against TDR is that in this way, it could lead to more congestion in the city.

Transparency is a lingering matter in TDR. In Mumbai, where TDR is issued for various purposes, it is difficult to keep a record of how much TDR is issued in each category, how much has been used, where it has been used and how much is the remainder.

A second issue that has created worries is the use of TDR in legitimizing building bye-law violations. People who have built in excess of the built-up area mandated by the byelaws can now use TDR to regularize the violations. Some protests are being lodged against this aspect of TDR.

Development, News

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