14th, May, 2025

What are Transferable Development Rights (TDR) in Real Estate?

If you’re planning to buy or build property, you might have come across the term Transferable Development Rights (TDR). But what does it actually mean? In simple words, TDR is a special right given to a landowner or developer to transfer unused development potential from one area to another. This blog will explain TDR in detail, its benefits, how it works, and why it’s important in real estate.

What is TDR in Real Estate? (Transferable Development Rights Meaning)

TDR (Transferable Development Rights) refers to a certificate or permission granted by the government to a landowner, allowing them to sell or transfer unused Floor Space Index (FSI) to another location.

Floor Space Index (FSI) or Floor Area Ratio (FAR) means the amount of construction allowed on a plot. For example, if the FSI is 2 on a 1000 sq ft plot, you can build up to 2000 sq ft.

Now, if a landowner cannot use all of their allowed FSI, they can transfer the remaining rights to another project in a different area. That’s called TDR.

Why is TDR Given? (Purpose of TDR in Real Estate)

TDR is generally issued when the government acquires private land for public projects like:

• Road widening

• Building flyovers

• Creating parks or gardens

• Setting up schools or hospitals
  
  

In such cases, instead of cash compensation, the government gives development rights to the landowner which can be sold or used elsewhere.

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How Does TDR Work? (TDR Process Explained)

Here’s a simple example of how TDR works:

1. The government acquires a portion of your land for road expansion.

2. Instead of giving money, they give you a TDR certificate for the area taken.

3. You can sell this certificate to a developer who wants to build more than the permitted FSI on their plot.

4. The developer can now use this additional FSI in a designated area called a receiving zone.

Types of Transferable Development Rights

There are 4 main types of TDR:

1. Reservation TDR – Given when land is reserved for public purposes.

2. Road TDR – Given when land is taken for road widening or new roads.

3. Heritage TDR – Given for preserving heritage buildings.

4. Slum TDR – Given when a developer rehabilitates slums.

Benefits of TDR in Real Estate

• Increases development potential for builders in high-demand areas.

• Landowners get compensated without cash payment.

• Helps in planned urban growth.

• Encourages slum redevelopment and public infrastructure.

• Boosts affordable housing projects.

Limitations and Challenges of TDR

While TDR has many benefits, it also faces some challenges:

• Limited receiving zones where TDR can be used.

• Government regulations keep changing.

• Difficult valuation of TDR certificates.

• Can lead to over-construction if not monitored.

TDR Rules and Policies in India

TDR policies are decided by state and city-level development authorities like:

• BMC (Mumbai)

• DDA (Delhi)

• HMDA (Hyderabad)

• BBMP (Bangalore)

Each state has different rules for TDR usage, FSI limit, and receiving zones. For example, Mumbai TDR rules are very active, while some cities are still adopting the concept.

TDR Certificate: What is it and How to Use It?

A TDR certificate is an official document issued by the authority mentioning:

• Total area transferred

• Transferable FSI

• Details of the original land

• Zone of application

You can sell this certificate to another builder or use it in your other project, depending on the local building norms.

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Where TDR Can Be Used? (TDR Receiving Zones)

You cannot use TDR anywhere. Cities have specific “receiving zones” where builders are allowed to use TDR to increase FSI. These zones are usually underdeveloped or growing urban areas.

TDR in Real Estate: Example for Better Understanding

Suppose a builder is constructing in a zone with an allowed FSI of 2, but he wants to build with an FSI of 3. He can buy TDR equal to the additional FSI (1) from someone holding TDR rights and use it for construction, as long as it follows the rules.