Why should you consider Integrating TDR in real estate plans?

by  Adv. Anamika Chauhan  

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8 mins

  

How Transferable Development Rights Increase Development Potential

Real Estate means any land or property in any form that can be used for any purpose and can be developed for further use. It involves purchasing, selling, and leasing. Real estate has a big impact on urban planning, economic stability, and wealth creation.

Nowadays, real estate is developing and one of the emerging tools of real estate is Transferable Development Rights. TDR has become a vital tool for conservation in the current state of urbanisation. This blog focuses on TDR in Real estate Plans.

What are Transferable Development Rights (TDR)?

TDR are the rights that allow one person to develop land and transfer it from one property to another. It is the process of giving a certain amount of additional built-up area in return for land that the landowner has surrendered.

In urban planning and land-use management, transferable development rights (TDR) are a mechanism for accomplishing certain development objectives while simultaneously protecting important resources or regions.

How TDR Facilitates Balanced Urban Development

TDR allows the developer to build above the allowed floor space index with the local regulations being followed. The concept of TDR has grown in significance due to increased urbanisation and less appropriate land available in society.

The government must compensate the landowners from whom it purchases specific property parcels for infrastructure projects or whatever requirements; nevertheless, this compensation is frequently less than the market value. To address these issues of poor compensation to the public, TDRs were created.

It limits the growth of cities while protecting open areas and historical landmarks. In urban locations where there is a constant demand for space, the TDR is considered an essential step.

Understanding the Official Definition

The Government of India defines Transfer of Development Rights as per the UDPFI Guidelines of the Ministry of Urban Development as “Transferable Development Right means a development right to transfer the potential of a plot designated for a public purpose in a plan, expressed in terms of total permissible built space calculated based on Floor Space Index or Floor Area Ratio allowable for that plot, for utilisation by the owner himself or by way of transfer by him to someone else from the present location to a specified area in the plan, as additional built space over and above the permissible limit instead of compensation for the surrender of the concerned plot free from all encumbrances to the planning and development authority.”

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What is a TDR Certificate?

When a property owner wishes to purchase rights based on the floor space index, they are granted such a certificate. A Transferable Development Rights (TDR) certificate is a legal document that attests to the transfer of development rights from one property to another.

It is considered proof that a transfer has been made from the sending zone to the receiving zone. This, in turn, renders expansion and side-by-side conservation. 

It is issued by a qualified government official objecting to the allocation of land for the development of infrastructure in the public interest. The list of necessary documents submitted by the landowner seeking a development certificate is as follows:

1. Application Form For TDR Certificate

2. Property Ownership Documents in any form

3. Development plans

4. Legal Documents

5. Document supporting that the person is eligible for the TDR program

These are a few general required documents; the list varies according to the different properties involved in the purchase and sale.

What are the Dynamics of Integrating TDR in Real Estate Projects?

The TDR’s dynamics usually involve around two zones: –

1. Sending Zone

This zone involves a developed, metropolitan area that voluntarily gives up its development rights. This area usually deals with issues like traffic and excess population, so to deal with these kinds of issues the zone tries to offload the development to other areas.

It usually involves property having development restrictions, such as a historically significant building, an environmentally sensitive location, or a property designated for preservation. The owner in this zone freely consents to restrict development in exchange for TDR credits equal to the development rights they have given up. 

2. Receiving Zone

This zone is supposed to benefit from the TDRs. It is usually an area that is not as developed, usually in suburban areas, and has huge potential growth. TDR credits are given to the property owner whose property has been taken for any purpose. These credits can be used for the construction of larger buildings, increasing floor area ratios than would generally be allowed.

The exchange between the two zones, in turn, helps develop the receiving zone and tries to take it easy on the sending zone resources. It would also, in turn, help develop both zones rather than just focus on one zone. It also promotes sustainable development. 

What are the Different Types of TDR in Real Estate Projects in India?

1. Slum TDR:

The population living in slum areas is usually relocated to other places for any purpose, be it road widening or any other. They are given built-up areas or relocated. The surplus land that is acquired is used by owners and developers in a specific ratio. This, in turn, renews the impoverished areas.

2. Heritage TDR:

This is given to the people who own a place, a building, or a site that has some kind of heritage value. Historical committees have imposed some kind of restrictions on development in these places. It tries to balance development and preservation of historical values.

3. Agriculture TDR:

This can be used as a way of protecting agricultural land and developing certain other regions.

4. Reserved Plots TDR:

This is basically when someone gives or donates their property or land for public use. Those who do so in turn get TDR credits which can be used in other places to develop 

5. Road TDR:

Road-related projects fall under this category. When government organizations purchase land for infrastructure or road widening projects, this TDR is applicable. The people of the community who are affected by road-related projects are compensated with TDR credits, which can, in turn, be used for other property development. 

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What are the Benefits of Integrating TDR in Real Estate Development Plans?

1. Maximising Potential:

The developers utilise the open space reservation and Floor Space Index to the maximum potential. This, in turn, increases the value of land and thus better accommodates new developments for the community. 

2. Infrastructure Development:

It can be used to develop society as a whole. Focus can also be placed on the development of public infrastructure as a result of urban growth. TDR makes it easier to develop underutilised or vacant land, encouraging effective land use and preventing the growth of cities.

3. Sustainable Urban Planning:

TDR’s support of mixed-use projects, reduction of traffic congestion, and creation of walkable communities achieve sustainable urban planning. 

4. Financial Gains:

Financial gains can be made through selling TDR rights, and also, in turn, helps in the expansion of particular areas. thus earning revenue on one side and developing the other side exceeding the maximum potential as well. 

5. Environmental and Public Health Advantages:

TDR offers a variety of housing options while promoting land conservation, which lowers the risk of flooding, improves the quality of the water, and enhances public health.

What are the Factors to Consider in Integrating TDR in Real Estate Development?

Integrating Transfer of Development Rights (TDR) into real estate development necessitates careful consideration of several aspects to achieve the desired results.

  • Recognizing the legal framework in the area where the project is located governs TDR programs is necessary. The requirements of the TDR program, land use policies, and zoning laws set forth by local government bodies must be discovered. All legal requirements must be met, terms must be discussed with stakeholders, and legally binding contracts must be finalised.

    The TDR amount is determined using specific calculations and distribution criteria, which are different for each state. Thorough organisation and scheduling of all development aspects are required. It is important to meet legal requirements and handle projects carefully.
  • Evaluating the sending and receiving available zones, getting to know their characteristics, development potential, constraints related to them, pricing patterns, and market demand for TDR credits. 
  • The environment can be impacted when the government decides to develop reserved space for public use. The local authorities must cooperate and follow a proper planning procedure. Risk management techniques can guarantee the project’s success.
  •  This can, in turn, help preserve open space, historic sites, and housing, provide economic growth, and bring about social justice in the community.
  • One also needs to examine the financial aspects of TDR and consider all its advantages, disadvantages, and aftereffects.

What is the Importance of Integrating TDR in Real Estate Projects?

Transferable Development Rights (TDR) have emerged as a significant participant in the quick-paced real estate market, helping to have value-driven development. The significance of TDR in the real estate environment is not just following a specific pattern as always but also trying to recognize a proper strategy to have a desirable result that surpasses the struggles and prepares for a better future ahead. Let’s know how:

1. Encouraging Smart Development:

TDR aids in strategically planning a development, which tries to minimise traffic, maximise land use, and achieve urban objectives. This ensures that the development is for growth purposes and not merely an expansion. By allocating development rights to regions with adequate infrastructure, TDR permits regulated development, which regulates density and avoids overpopulation.

2. Fostering Ecological Methodologies:

Nowadays, the masses are becoming familiar with the term sustainability and how to achieve it; TDR integration in real estate is becoming one method that supports ecologically responsible development.

It promotes preserving green spaces, lessening any kind of environmental impact due to unrestrained growth, avoiding urban sprawl, preserving green places, and lessening the environmental impact of unrestrained growth by redistributing development potential. It tries to ensure that a balance between growth and environmental degradation is maintained.  

3. Value-Driven Development:

TDR can increase property values, thus benefiting the neighbourhood as a whole in terms of general development and improvement. It facilitates a mutually beneficial relationship between real estate property valuation and urban growth.

4. Contemporary Real Estate:

It is a concept that is evolving with time and adapting to the requirements of the real estate market. It works according to the market needs, various initiatives, and various new dimensions in society. It can help in realising the value of the properties either being under or overvalued which in turn provides development 

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Conclusion

TDR helps in the development and conservation of the real estate market. It’s a method to make the most of your resources and support the wise and sustainable development of communities. It puts an advantage on increasing your real estate valuation rather than just as a tool.

Frequently Asked Questions

Q1. What is the full form of TDR?

Ans1. The full form of TDR is Transferable Development Rights.

Q2. What are Transferable Development Rights?

Ans2. TDR is the right that allows one person to develop land to be transferred from one property to another.  It is the process of giving a certain amount of additional built-up area in return for land that the landowner has surrendered. This method is frequently used in land-use management and urban planning to strike a balance between development goals and preservation or conservation goals

Q3.  How does TDR work in real estate?

Ans3. The government must compensate the landowners from whom it purchases specific property parcels for infrastructure projects or whatever requirements; nevertheless, this compensation is frequently less than the market value. To address these issues of poor compensation to the public, TDRs were created.

Q4. What is TDR, and how is it calculated?

Ans4. TDR are the rights that allow one person to develop land and transfer it from one property to another. The computation of TDR is determined by local legislation, which may vary from one area to another. TDR is frequently obtained by giving up ownership of land to the government or fulfilling certain conditions for land development. It is possible to apply the square footage or FSI used to show the transferable value to different projects.

Q5. What are the different types of TDR?

Ans5. Five types of TDR are generated – Road TDR, Reserved plots TDR, Slum TDR, Heritage TDR, and Agricultural TDR.

Q6. What are the advantages of TDR

Ans6. The adoption of TDR also increases the value of land parcels available for development. Landowners can choose to sell their rights to development, making growth advantageous to the neighbourhood and landowners alike. As a result, the landowners’ properties are appreciated.

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Adv. Anamika Chauhan

Adv. Anamika Chauhan

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Advocate Anamika Chauhan has been practising law independently for the last 5 years, during which she has gained extensive experience in handling cases. She offers legal consultancy and advisory services with a focus on achieving ethical and professional results. In addition, her excellent communication skills allow her to articulate arguments persuasively in both written and verbal forms.

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