An Explainer: Transferable Development Rights

In transfer of development rights, authorities seek to preserve land owner's asset value by moving the right to develop a property from one location to the other. 

PropGuide Explains Transferable Development Rights

Transferable development rights (TDR) is a zoning tool that urban local authorities use to preserve farmland and areas of cultural or historical importance by encouraging real estate development in other area. The right to develop is transferred from the sending area to the receiving area. At times, the right to development is transferred because population density is low in the sending area and high in the receiving area.

When implemented well, transfer of development rights allows urban density to rise while preserving farmlands, cultural and historical spaces. But, this might not be the case always. The government of Karnataka, for instance, allows transfer of development rights from intensely developed zones to moderately developed zones or sparsely developed zones and not vice versa. But, the demand for floor space is often higher in intensely developed zones that are rich in amenities and civic infrastructure.

In Maharashtra, TDR rates were hiked recently. Earlier, when TDR was available in any part of Mumbai, supply and demand played a greater role in real estate development. Now, TDR is 60 per cent of the ready reckoner rate instead of 20-30 per cent.

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