Maharashtra Government Slashes Premium on Real-Estate Projects
Amidst the CoronaVirus Pandemic and to revitalize the slowing real estate , the State Government of Maharashtra on Wednesday, 6th January 2021 slashed premium and levies charged on construction by 50% till December 31, 2021. The move is expected to boost the buying sector of real estate. This cut will apply to both the segments of the property, the ones that are being constructed, and also the ones that are ready for possession under the Development Control and Promotion Regulation 2034.
The cabinet of Maharashtra informed that this measure is based on the report submitted by Deepak Parekh to boost the construction and sales sector of the state post-COVID-19 lockdown. They further informed that the developers who charge the extra 50% from the waiver will have to pay the entire stamp duty on behalf of customers.
But what are the Premium Prices in Real Estate?
According to the Deepak Parekh committee, as much as 22 premiums are collected by the developers in Mumbai which includes staircases, lift well, lobbies, etc. Developers now cannot charge more than 50% for these facilities. Mumbai has the highest premium charges and it accounts for 22 different premiums that are paid by the consumers. Bengaluru has 10 different premiums; Delhi has 5 premiums and Hyderabad has the lowest to 3 premiums that are charged by the consumers on their property.
Meanwhile, the opposite party cabinet ministers raised questions on this decision of the government. Leader of opposition Devendra Fadnavis too criticized this idea of the government saying that it is not a customer-centric idea, and it will benefit only some of the builders from the community. It will lead to the windfall gain of some of the big players from the industry.
Also Read: Digitization in Real Estate – Pros and Cons
The COVID-19 lockdown that was enforced in late March of 2020 adversely impacted the Real Estate industry that saw a 20% decline in Real Estate sales from 60,943 units in 2019 to 46,688 units in 2020. However, the Maharashtra government reduced the stamp duty on property purchases from 5% to 2% in September. The impact of this step resulted positively as Q4 of the year as the sales jumped to 80% YoY till the end of the year. It will continue to be 3% from 1st Jan 2021 to 31st March 2021.
Deepak Goradia, president, Maharashtra Chambers of Housing Industry (MCHI- CREDAI) applauded this decision by the government and said, ’We welcome this historic decision and are confident that this move will expedite the economic recovery of Maharashtra with more than 250 allied industries, which will generate jobs.’