Also known as Transferable development rights
When a city takes a strip of land for road widening, a garden or a reservation, it can compensate the owner with TDR instead of cash. The owner receives a development rights certificate for a stated floor area, which is traded in a market and loaded on to other plots within the limits of the receiving zone.
Developers buy TDR to build beyond the base FSI, especially in Mumbai, Pune, Bengaluru and Hyderabad. Its price moves with demand for construction, so TDR cost appears in redevelopment and project feasibility sums.
Rules on where TDR can be generated and used, and how much a plot can take, differ by city and are set in the development control regulations.
Example
A landowner in Mumbai surrenders 500 sq m of his plot for road widening and receives TDR for the area allowed by the regulations. He sells the certificate to a developer redeveloping a society in another ward, who loads it on to that plot to add two floors within the permissible limit.
Figures are illustrative, not market rates.
Questions about TDR
Who can buy TDR?
Any person can usually buy and hold TDR, but it is useful only to someone who can load it on a plot where rules permit. Most buyers are developers and redevelopment projects.
Does using TDR change the building approval?
Yes. Loading TDR raises the permitted floor area, so the developer needs revised plan approval. Buyers in projects using TDR should check that the sanctioned plan covers the floors they are buying.
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