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Raju (HR Executive)     06 December 2021

Rent on pagadi system post redevelopment

Hi there 

I was staying with my family in a pagadi system flat with area approx 400 and paying rent of 550/- per month

Now BMC has demolished the building due to dilapidated condition 

Land owner/ Builder wishes to continue pagadi post redevelopment and not ownership 

The extra area that we will get is 200 sqft  total 551

Need to know 

  1. what is the rent amount applicable on the new flat?
  2. Is the rent amount calculated on whole area or the extra area only 
  3. After some years of occupancy if the tenant wants to sell off to owner can tenant do it? If yes then what area will be considered old area or new area 


Plz share legal point on the above

 3 Replies

Anaita Vas   06 December 2021

As per my calculations, the rent applicable on the new flat would be Rs. 758

Rental yields of a residential property vary between 2.5 percent and 3.5 percent of the market value of the property. For example, if the market value of your property is Rs 30 lakh, its rental value will range between Rs 75,000 and Rs 1,05,000 and monthly values will differ from Rs 6250 to Rs 8750.  However, in some cases, the valuation may differ owing to demand and supply disequilibrium. If the property is in a category that is high on demand but witnesses limited supply, or any other positive external factor comes in play, the rental rate can go as high as 3.5 percent of the property but should not exceed it. On the contrary, if the demand is low, the rental rate should be 2.5 percent of the property value.

Amenities also have significant impact on the rental value of a property. A property with wall cupboards, fans, kitchen appliances, an additional balcony or storage space will indisputably command a slightly higher rent as compared to a property of similar market value as yours and located in the same micro-market. 

Under the pagdi system, the tenant has certain rights over the property but not over the land. The tenant can even sub-let the premises or sell the property, by giving a share to the owner.



Anaita Vas

Raju (HR Executive)     06 December 2021

Hi Anaita Vas, 
Thanks for the quick reply
My property resides in mumbai where new construction costs/ market value of property is around 1 cr then how come Rs 750/- is the rent?
can you please elaborate also is there any rule which mentions this plz share

Dr J C Vashista (Lawyer)     07 December 2021

Is it really a legal dispute / problem to be considered by experts on this platform ?

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