For decades, Mumbai’s pagdi system has quietly shaped the city’s housing landscape, especially in its older neighbourhoods. Now, after years of debate and stalled redevelopment, the Maharashtra government says the time has come to change it.
Deputy Chief Minister Eknath Shinde has announced a new regulatory framework aimed at speeding up the redevelopment of pagdi buildings and gradually phasing out the system. Calling it a historic step, Shinde said the move is necessary to prevent building collapses, save lives and unlock redevelopment that has been stuck for years.
So what exactly is the pagdi system, and why has it become such a challenge for Mumbai?
What is the pagdi system?
The pagdi system is a traditional form of tenancy that dates back to the pre-Independence era. Under this model, a tenant pays a large one-time amount, known as pagdi, to the landlord at the time of moving in. In return, the tenant enjoys near-lifelong occupancy at a very low monthly rent.
Unlike regular tenants, pagdi occupants have rights that resemble partial ownership. They can often sublet the property or even sell their tenancy rights, usually with the landlord receiving a share of the transaction. Over time, this system created a unique grey area where tenants are not full owners, yet landlords do not have complete control over their own property.
Despite being old-fashioned, the pagdi system is still legally recognised under rent control laws in Maharashtra.
How widespread is it in Mumbai?
According to the state government, Mumbai has more than 19,000 rent-controlled buildings operating under the pagdi system. Many of these structures were built before 1960 and are now structurally weak. While some have been redeveloped over the years, a large number remain in poor condition. Officials say more than 13,000 such buildings are still waiting for redevelopment.
Several of these ageing structures have either deteriorated badly or collapsed, especially during monsoons, putting residents at serious risk.
Why redevelopment has been so difficult
At the heart of the problem is a deep conflict between tenants and landlords.
Tenants, protected by rent control laws, pay extremely low rents and fear losing their homes or not receiving fair space after redevelopment. Many worry that new projects may reduce their living area or change their legal status.
Landlords, on the other hand, argue that the low rents make it impossible to maintain or repair buildings, let alone redevelop them. They are also required to rehabilitate tenants during redevelopment, often without receiving what they consider fair compensation for their land and ownership rights.
This clash has led to endless legal disputes. The government estimates that nearly 28,000 cases related to pagdi buildings are pending in small-cause courts, delaying redevelopment for decades.
Why the government wants reform now
Shinde said the existing system no longer reflects the realities of Mumbai’s ageing housing stock. Unsafe buildings, delayed redevelopment and frequent legal battles have made reform unavoidable.
The new framework aims to offer a clearer and more balanced approach. While existing redevelopment options under regulations such as 33(7) and 33(9) will continue, the government plans to introduce an additional route for buildings that have failed to benefit from earlier policies.
What changes are being proposed
Under the proposed rules, tenants will receive floor space equal to the area they currently occupy, ensuring they are not short-changed during redevelopment. Landlords will get floor space based on their land ownership entitlement.
For tenants from economically weaker sections and low-income groups, the government has acknowledged that FSI incentives alone are not enough. In such cases, it plans to ensure that the full cost of reconstructing their homes is covered through additional incentives.
If developers cannot use the full permissible FSI due to height or planning restrictions, the remaining balance will be given as Transferable Development Rights, or TDR.
The government also plans to set up fast-track courts, with approval from the high court, to resolve pending disputes within three years.
What this could mean for Mumbai
Experts say the reform could finally break the deadlock that has paralysed redevelopment in many parts of the city. Clearer rules may encourage landlords to participate, while tenants could gain more secure rights, possibly even ownership-based homes in redeveloped buildings.
If implemented effectively, the new framework could improve safety, speed up redevelopment and transform some of Mumbai’s oldest neighbourhoods. For thousands of families living in crumbling pagdi buildings, the long wait for safer homes may finally be nearing an end.
