On January 6, Maharashtra government, in order to boost residential sales approved the proposal to cut the premium on real estate projects by half till December 31, 2021. On behalf of homebuyers, developers availing of the scheme would have to pay full stamp duty and registration charges.
It was decided at the cabinet meeting chaired by CM Uddhav Thackeray that the urban development department will give premium concession to construction projects. Projects will have to pay full stamp duty to customers.
Recommendations By The Committee:-
As recommended by the Deepak Parekh Committee, it was decided at the meeting that a 50 percent discount will be given on all the various premiums levied by the state government on construction projects till 31.12.2021 and also concessions in the premiums levied by all planning authorities/local administrations at their level
The concession will be considered for premium rates whichever is higher, April 1, 2020, or the current annual market price table to avoid the undue benefit of this concession to a particular group or project.
All projects which want to avail of the premium concession will have to pay full stamp duty for the customers till 31.12.2021. This would ensure that consumers get the direct benefit of the concession that the state government wants to give in the premium.
The move will go a long way in expediting project completion and the industry will witness new launches in the market according to the Real estate experts.
Reduced cost for homebuyers will be due to the premium reduction as well as the stamp duty charges which will be borne by the developers.
This will not just rationalize input costs for developers, help supply momentum, keep price escalation in control but also make the real estate sector attractive for investments from institutions.
It has been proposed to lower the construction premiums by 50 percent till December 31, 2021, for all ongoing and new projects. The proposal was to charge all ongoing and new projects – sanctioned before December 31, 2021 – discounted premiums of 50 percent for all payments paid on or before the December-end cut off.
Maharashtra government on the recommendations of the Deepak Parekh committee, had been weighing a reduction in the premiums on real estate projects under the Development Control and Promotion Regulations (DCPR). The committee had also proposed that the reduced premiums be paid at the time of granting the occupancy certificate, without any interest being levied.
According to the committee, as of date, there are as many as 22 premiums collected in Mumbai under various heads – including FSI, staircases, lift well, lobbies, etc. which is significantly higher than in other comparable top cities.
In Delhi five and in Hyderabad just three whereas in Bengaluru, developers have to pay 10 different premiums and charges.
Real Estate sector Applauds For the Cabinet’s Decision:-
As a direct result of this decision, stock prices of prominent real estate firms such as Godrej Properties and Oberoi Realty have risen by 7% in the last few days.
Niranjan Hiranandani, president NAREDCO said “It is a great bolstering move made by the state government by sealing approval to reduce premiums by 50% under the new DCPR rule 2034 across the board for on-going and new projects up to Dec 31, 2021. This move will go a long way in expediting the project completion and the industry will witness new launches in the market”.
He said “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. Also, the reduction in premiums for new launches will help the development at the lesser input cost and over a period of time there is a possibility of lower price for new inventories that shall come into the market”.
He added “It is a move expected to meet the urgent need for economic activity and generating employment. The industry will be injected with additional liquidity in the backdrop of cumulative policy reforms due to the Covid pandemic, which has been considered as a ‘force majeure’ situation by the Government of India. This reduction in premiums will help in quick turnaround of projects and uplifting Industry sentiments”.
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