Investing In Slum Rehabilitation Authority Flats? Know This

In order to rehabilitate and give better livelihood options to those living in slums, Maharashtra government formed the Slum Rehabilitation Authority (SRA) . The authority looks after the redevelopment projects at these slum sites and shifts them to better dwelling units. These dwelling units are built by private developers when all the stakeholders of the particular area give their consent for redevelopment. Such projects are called SRA projects and the units are termed SRA Flats.

There are two types of construction in every SRA project- the owner's component who surrenders the existing area to get a new unit of 300 sq ft and the builder's component which is sold by the developer to recover the cost of construction.

Here are few rules pertaining to SRA Flats, issued by SRA Authority:

The beneficiaries cannot sell their property for 10 years. This lock-in period is applicable to the developer as well.

After 10 years, the sale price of the unit will also include government's share, termed as transaction fee which is equivalent to the stamp duty or Rs 1 lakh, whichever is more.

Buyers or his family members should not have any other home within the Corporation's limit and must produce domicile certificates for the purchase.

The buyer should not be any organisation or institution but should belong to the economically weaker section, lower income group and middle-income group.

 Home loans For SRA flats

Banks fund purchase of SRA Flats only when the lock-in period is over and the buyer has all the approvals from the authority and the concerned parties. Apart from this, the loan is treated as any other home loan where due diligence is done and requires a permit from the SRA Authority.

Risks involved in buying SRA flats

Though SRA housing schemes are attractive but according to an estimate, one-third of the total units are illegally occupied and do not have proper documentation. The beneficiaries sell or rent the unit as soon as they get the possession on the basis of power of attorney rather than sale deed. This is against the SRA norms but hardly any action is taken. Both the parties sign the mutual understanding affidavit but are not eligible for home loan because of its legal status. 

Check the sale deed of the property which should be in the name of the rightful seller. Banks require registered, stamped deed and power of attorney is not enough to prove the legal soundness of the property.

Ask the seller to obtain the release certificate from the bank to know if all dues have been cleared by him.

Also Read: Is Housing For All Target Achievable?