Maharashtra Introduces New Regulatory Framework to Overhaul Mumbai’s Pagdi System

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Maharashtra has announced a major policy shift by preparing a new regulatory system to phase out Mumbai’s long-standing Pagdi housing model. Deputy Chief Minister Eknath Shinde said the framework is intended to clear persistent confusion between landlords and tenants and to speed up the redevelopment of the city’s ageing buildings.

What the Pagdi System Means

The Pagdi arrangement dates back to the pre-Independence period, when it became a common way for people to secure accommodation in Mumbai. In this model, tenants would pay a significant upfront premium to the property owner in return for the right to occupy the premises almost permanently. Rent after this payment remained nominal and often stayed unchanged for decades. Although some tenants received limited ownership-like benefits, the title of the property remained with the landlord. These tenancy rights could also be transferred to others, with the tenant and landlord sharing the sale amount.

Why the Model Became Difficult to Sustain

With time, the Pagdi system created multiple challenges. Landlords collected extremely low rent—insufficient for maintenance or taxes—leading many structures to weaken and become unsafe. Redevelopment rarely progressed because landlords had little to gain financially, while tenants feared losing their long-established rights. The system also fostered cash-based deals, reducing transparency and causing loss of revenue to the government. Ambiguous rules added to the insecurity felt by tenants during redevelopment negotiations.

What the New Regulatory Framework Is Expected to Address

The new policy aims to create clear rules governing tenant and landlord responsibilities. Tenants are likely to receive better-defined rights and possibly a formalised share in the redeveloped property. For landlords, the framework may introduce fair compensation, revised rental terms, or redevelopment benefits to make projects economically feasible. A specialised body is also expected to oversee disputes, ensure transparency, and standardise redevelopment procedures.

Who Stands to Benefit?

The proposed changes appear to be designed for balanced advantages. Tenants would gain stronger legal protection and improved housing conditions. Landlords would finally have financial incentives to participate in redevelopment, alleviating the burden of outdated rent structures. Ultimately, Mumbai could be the greatest beneficiary, as the transformation of Pagdi buildings would enhance safety, modernise neighbourhoods, and stimulate the city’s real estate sector.

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