Maharashtra Offers Clarity On How Real Estate Fee Cut Will Work
Maharashtra issued a directive to the state planning authorities to reduce fees charged for real estate approvals and listed out conditions for availing the benefit, providing clarity to developers.
Among other things, developers will have to pay stamp duty on behalf of buyers till all units of a project that has availed the benefit are sold, according to the directives. And planning authorities and real estate firms will have to publish the list of such units on their websites.
Last week, Maharashtra slashed fees or various premiums developers pay for approvals of residential projects by half in the second such decision to make a property attractive for homebuyers. The cut came after suggestions by a committed led by HDFC Ltd. Chairman Deepak Parekh to boost the real estate sector.
BloombergQuint earlier reported that developers are awaiting clarity about the premium cuts.
The state issued the directive on Thursday under section 154 of Maharashtra Regional Planning and Town Planning Act for premium reductions. According to its statement:
- Both ongoing as well as new projects will get the benefit of reductions that will be applicable till Dec. 31.
- The reductions are applicable to premiums paid by the developers, and not for development or other administrative charges.
If the planning authorities decide to allow 50% reduction in premiums:
- The developer taking the benefit of the concession will have to pay full stamp duty on behalf of the customer.
- The developer will have to give an undertaking to the planning authority in this regard.
- Developers will have to publish on their website the list of customers on whose behalf they have paid the full stamp duty.
- Developers will have to submit to the planning authority a certificate from the customer stating that developer has borne the stamp duty on the behalf of the customer.
- The list of projects or the parts of the projects that have availed the benefit of the scheme will have to be submitted to the planning authorities (stamp registration office for information through the municipal commissioner/municipal council or nagar panchayat chief officer/collector). The authorities will have to publish the list on their websites.
- The developers will have to continue to pay stamp duty for customers till all units of the project that have taken the benefit are sold.
- Ready reckoner rates of either April 1, 2020 or the prevailing rate at the time of payment of premium, whichever is higher, will be considered under the scheme.
“Although these directives make a few things clear, there are still some issues which need more clarity,” said Deepak Goradia, president at developer lobby Credai MCHI. “For instance, what happens in an ongoing project where a developer has already paid a part of premiums. If they take this benefit for the remaining premiums, will they have to pay proportion to the benefit that has been availed?”
He said developers hope to get more clarity when municipal corporations issue their notifications.
According to Vilas Nagalkar, an architect and member of PEATA, an association of architects, engineers and town planners, the reduction will be most beneficial for those societies that have already initiated self-redevelopment. “Now, we await similar directions from the Mumbai Municipal Corporation for the region.”