Telangana revamps TDR policy to protect water bodies
Mandatory use in high-rises draws mixed industry response
Hyderabad
In a significant policy shift aimed at balancing environmental protection with urban growth, the Telangana government has amended the Building Rules–2012 and its Transferable Development Rights (TDR) framework through G.O. Ms. No. 16, issued by the Municipal Administration and Urban Development (MAUD) Department. The move, guided by Supreme Court and National Green Tribunal (NGT) directives, seeks to prevent encroachments on lakes, nalas and river systems while offering structured compensation to affected landowners. The policy, however, has evoked mixed reactions from the real estate industry, particularly due to the mandatory use of TDR in high-rise buildings.
Earlier, equal TDR benefits were extended for land surrendered in both FTL and buffer zones. The policy introduces rationalised incentives ranging from 200 per cent to 400 per cent TDR, depending on the nature of land surrendered, particularly for infrastructure requirements such as road widening and lake rejuvenation. According to the government, the objective is to encourage voluntary land surrender, reduce disputes, and ensure long-term protection of ecologically sensitive zones.
A key structural change is the mandatory use of TDR in high-rise buildings. Developers constructing buildings exceeding 10 floors must now utilise TDR for 10 per cent of the built-up area above the 10th floor. The government believes this will strengthen demand for TDR credits, prevent distress sales and make the system economically viable.
Urban planners see this provision as a tool to regulate unchecked vertical growth and introduce planning discipline into Hyderabad’s rapidly expanding skyline. By internalising the environmental cost of vertical expansion, the policy attempts to align real estate growth with sustainable urban planning.
Industry response has been divided. Siva Prasad, Managing Director of Lexus Properties and Strategic consultant for Supadha Developers, Tidasa Reality ventures Pvt Ltd & DE Trilight Properties, termed the policy a progressive step. “The graded TDR framework fairly compensates landowners while protecting Hyderabad’s shrinking water bodies. Offering higher TDR for infrastructure-related land surrender strikes a balance between conservation and equity,” he said.
However, he cautioned that mandatory TDR usage would increase project costs. “For high-rise developments, these additional costs will likely be passed on to buyers, especially in premium locations. While incentives like setback relaxations are positive, procedural clearances and title verification could slow execution in the short term,” he noted.
A senior Hyderabad-based developer, speaking anonymously, was more critical, arguing that the policy disproportionately impacts mid-sized builders. “Making TDR compulsory escalates construction costs and ultimately burdens middle-class homebuyers. The industry should have been consulted more widely before enforcing such a structural change,” he said, adding that the new order effectively narrows the flexibility offered under earlier government orders.
For developers, the revised framework necessitates early integration of TDR procurement into project feasibility and financial planning. While a more liquid TDR market could provide flexibility through buy-sell mechanisms, the immediate risk of price volatility remains. Rising TDR demand may also alter profitability models for high-rise projects, at least until supply stabilises.
Landowners in FTL and buffer zones stand to benefit from greater clarity and enhanced compensation. TDR credits can be used on other properties or monetised, providing tangible value for land that has lost development potential. Where landowners opt for development relaxations instead of TDR, those benefits will be linked directly to assess TDR value.
Overall, the TDR policy reflects Telangana’s intent to integrate environmental safeguards into urban growth. While it promises reduced litigation, smoother infrastructure execution and better protection of water bodies, its success will depend on transparent implementation and cost management. The real test will be whether the policy can achieve ecological compliance without significantly eroding housing affordability in a rapidly verticalising city.
