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Mumbai real estate: Maharashtra plans major overhaul of pagdi system. Here’s all you need to know
Maharashtra Dy CM Eknath Shinde has announced a new framework to redevelop Mumbai’s pagdi buildings, aiming to speed projects and prevent building collapses
Maharashtra Deputy Chief Minister Eknath Shinde has announced a new regulatory framework to redevelop Mumbai’s 'Pagdi' buildings, describing it as a “historic decision” aimed at eventually eliminating such properties from the city. Speaking in the legislative assembly, Shinde said the move will expedite redevelopment of old structures, prevent collapses, and reduce loss of life and property, a PTI report said.
What is the pagdi system?
Pagdi is a traditional tenancy rental model, where the tenant is a partial owner of the house, enjoys nominal rental rates, and also has the rights to sublet and sell the property.
The pagdi system, where tenants enjoy near-lifelong occupancy in exchange for an upfront payment and nominal rent, continues to shape a large share of Mumbai’s older housing stock. The model, rooted in pre-Independence rental practices, remains legally recognised but has long been criticised for creating maintenance challenges, obstructing redevelopment, and encouraging informal cash transactions, according to reports.
Also Read: Pagdi tenants worried as state govt fails to defend them in court
How many pagdi buildings does Mumbai have?
According to Shinde, more than 19,000 rent-controlled buildings in the city operate under the pagdi structure, many of them built before 1960. Only a fraction has undergone redevelopment. Some of these have already been redeveloped, some have deteriorated or collapsed, and more than 13,000 are still awaiting redevelopment," media reports quoted him saying.
"The redevelopment of Pagdi buildings has received a poor response because of legal disputes and structural complexities. A fair and balanced framework that protects the rights of both tenants and landlords is essential," Shinde was quoted as saying by PTI.
The deputy CM stated that tenants under the system are protected by existing rent control laws; however, landlords often feel disadvantaged due to extremely low rents and mandatory rehabilitation obligations.
“These buildings, the tenants, and their agreements are legally valid. The govt has protected tenants through the Rent Control Act. However, landlords often complain that due to tenants' rehabilitation rights, they do not receive fair compensation for ownership. Numerous disputes between tenants and landlords remain pending in small-cause courts, which have limited redevelopment efforts,” he said.
Changes proposed
Shinde said that for tenants from economically weaker sections and low-income group, Floor Space Index (FSI) incentives alone are not enough, and the government will ensure the full reconstruction cost of their existing homes is covered. A separate set of rules will be drafted for this purpose.
Key provisions under the proposed rules include that tenants will receive FSI equal to their current occupied area, landlords will receive FSI corresponding to their land ownership entitlement, and economically weaker and low-income Pagdi occupants will be given an incentive FSI to cover free reconstruction.
If height or other restrictions prevent utilisation of the full FSI, the remaining balance will be provided as Transferable Development Rights (TDR).
Why is the new regulatory mechanism required?
Shinde said the move will fasten the redevelopment of old buildings, prevent collapses and reduce loss of life and property.
Existing options, such as regulations 33 (7) and 33 (9) will continue, but the new framework will offer an additional route for buildings that have not benefited so far.
The Deputy CM was quoted by PTI as saying that nearly 28,000 cases between tenants and landlords are pending in small-cause courts, delaying redevelopment for decades. The government will, with the high court's approval, set up additional fast-track courts to dispose of these cases within three years.
"This initiative will finally pave the way for lakhs of Mumbai residents living in Pagdi buildings to get ownership-based homes. Neither tenants nor landlords will face injustice. The government is committed to resolving any further hurdles," Shinde was quoted as saying by PTI.
Experts say a specialised framework has become essential because the existing laws no longer reflect the realities of Mumbai’s ageing housing stock.
One of the biggest challenges is the low rent collected under the pagdi system, which has left landlords without the financial ability or incentive to maintain or repair ageing structures. As a result, many buildings have deteriorated significantly over the years.
Redevelopment has also been slow because of disagreements between landlords and tenants. Landlords often feel that the low rental income makes redevelopment unviable, while tenants fear they will not receive fair benefits or equivalent space during reconstruction. These conflicting interests, combined with decades-old rent control laws, have stalled progress in several neighbourhoods.
Impact: Clearer rights, faster redevelopment
Experts say the reform is expected to bring greater clarity, transparency, and efficiency to a system that has long been hindered by outdated rules. Tenants could gain more secure rights in redeveloped buildings, potentially through ownership or long-term titles, while landlords may receive fairer compensation or improved rental terms, encouraging them to support redevelopment.
Developers are likely to face fewer legal obstacles, as clearer processes reduce the risk of disputes. This could speed up redevelopment across Mumbai’s old and congested neighbourhoods, where ageing buildings have become increasingly unsafe.
