Maharashtra Government To Consider Reducing Real Estate Premiums In Mumbai

With a view to inject a new lease of life into Mumbai’s real estate sector, Maharashtra government is considering a reduction in the premiums levied by several authorities on building projects. This announcement was recently made by state housing minister Atul Save at an event in the city.

The event was organised by the Confederation of Real Estate Developers’ Associations of India (CREDAI) and the Maharashtra Chamber of Housing Industry (MCHI). Save said the idea is to to kickstart low-cost housing as also give a fillip to stuck up rehabilitation and slum redevelopment projects. His main concern, Save maintained, was that nearly 50 to 60 per cent of Mumbai’s population is still living in slums.

“Of late I have received several representations from developers requesting a cut on real estate premiums. I will soon be calling a meeting with them to discuss this issue. But I expect them to consider and focus on low-cost and affordable housing to ensure that all sections of society are catered to,” Save said.

‘Project costs need to be brought down’

According to real estate developers, there are more than 25 types of premiums that a developer ends up paying to authorities. Nearly 20 to 30 per cent of the project cost goes towards these premiums which in turn impacts property costs. The burden is passed on to home buyers in the low-cost and affordable sectors. “In order to make housing affordable, the project costs need to be brought down. If the government cuts real estate premiums it will enable us to focus on low cost housing,” according to MCHI.

The minister also said he had instructed the chief executive officer of the Slum Rehabilitation Authority (SRA) to make a list of stalled projects and take decisions on a case by case basis to ensure that these projects are revived.

Recommendations of CREDAI-MCHI

The key recommendations of CREDAI-MCHI include: Reduce all premiums/charges/levies/cess/premiums, including those payable for staircases, left wells, lobbies etc by 50 per cent permanently.

Spread the payments of premiums over the project cycle without any rate of interest or penalty; introduce a new 10.10.80 scheme with 10 per cent during premium approval, 10 per cent during issue of commencement certificate and 80 per cent during occupation certificate; no levy of additional premium on TDR, specially for redevelopment projects and simplify the building plans approval ecosystem by reducing the number of premiums from the current 36 to 6.