Maharashtra Slashes Premiums Developers Pay On Real Estate Projects By Half
Residential apartment buildings stand on the outskirts of Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Maharashtra Slashes Premiums Developers Pay On Real Estate Projects By Half

Maharasthra, home to India’s most expensive real estate market, has agreed to halve fees on government approvals for new and upcoming construction on the recommendations of a panel headed by Deepak Parekh.

“The premiums will be reduced by 50% and the developers who take the benefit of the reductions will have to pay stamp duty on behalf of the homebuyers and this reduction is valid till Dec. 31, 2021,” Bhushan Gagrani, principal secretary of Urban Development Department, told BloombergQuint over the phone.

For the scheme, ready reckoner rates of either April 1, 2020, or the ongoing financial year—whichever is higher—will be applicable. The state had in August last year reduced stamp duty on real estate transactions between Sept. 1, 2020, and March 31 this year to revive a sector that’s been battered by the pandemic, a fund crunch and slowing sales.

According to the committee headed by Parekh, chairman of HDFC Ltd., as many as 22 premiums collected in Mumbai under various heads at present—including floor-space index, staircases, lift well, lobbies, etc., said Anuj Puri, chairman at Anarock Property Consultants “This is significantly higher than in all other comparable top cities in the country. For instance, in Bengaluru developers have to pay 10 different premiums and charges, and in Delhi five and in Hyderabad just three.”

Developers applauded the move. The industry applauds this booster dose making many projects viable and we shall adhere to the rules laid down in lieu of availing these benefits, said Niranjan Hiranandani, president of developer lobby Naredco. “Also, reduction in premiums for new launches will help development at lesser input cost and over a period of time there is possibility of lower price for new inventories that shall come into the market.”

Deepak Goradia, president of Credai MCHI, said, the movie will hasten Maharashtra’s economic recovery as more than 250 allied industries and large employment is dependent on the real estate sector.

Rationalising the premiums will boost Mumbai’s real estate industry, Puri said, adding reduced development costs to developers and lower purchase cost to homebuyers can result in increased demand.

Mumbai, India’s second-largest residential real estate market, and Pune contributed almost half of the sales in July-December, Knight Frank said in its half-yearly report.

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