What is TDR in Real Estate
TDR stands for Transferable Development Rights and it is a very essential tool for the real estate industry and plays a major role in land development in big cities. This also affects the land value. Government acquires land for development purposes from the land owners and gives them compensation for it which is usually lower than the market price due to which the concept of TDR came into existence. These rights are obtained in the form of certificates and can be sold into the market.
There are four types of transferable development rights :
- Road TDR
- Reserved Plots TDR
- Slum TDR
- Heritage TDR
All these types of TDR have their own purpose and their worth varies from place to place. The things which affect the value of TDR are location, availability of resources, type of project, etc. In major cities, It is responsible for the land development of many slum areas.
What is the purpose of TDR?
The purpose of Transferable Development Rights is very important in the real estate industry, especially in big cities. It allows a developer to build beyond the permissible Floor Space Index which is very essential for the expansion of many projects. There is a lack of space in most of the cities and TDR increases land availability in an indirect but legitimate way. It is essential for land development in any specific area. The government also uses it as an instrument to protect land for the future or because of the resources it provides. In urban areas, it is used for projects like the widening of roads, the construction of parks and schools, etc. It also reduces the time earlier needed to work on these projects. Due to the availability of TDR, These projects can be started much easier. The purpose of TDR is to make land development projects easier and remove the complications that existed earlier.
The market for Transferable Development Rights
Transferable Development Rights are obtained in the form of certificates and these certificates can be sold in the market. The price of these certificates depends on the location, type of project, demand, and availability of the concerned piece of land. The government has no control over the price of TDR. There is a huge market for TDR in many big cities. Real estate developers purchase them for the expansion of their projects and also for reselling purposes. Due to their importance, they also affect the price of the property in that area.
Transferable Development Rights play an important role in land development projects and are essential for land owners, real estate developers, and the government. There is a huge market for TDR and the unplanned use of TDR has increased congestion in many parts of some cities but theoretically it is a good scheme for development and the purpose of Transferable Development Rights is being served well in many cities by aiding the sustainable development to a good extent. If these certificates are acquired and sold smartly then these are a good choice for investment with greater returns.