Builders are set to gain a lot after the construction premium cut that was announced by state government. While builders have claimed that home prices will come down, many are skeptical.
By Varun Singh
The state government’s announcement of 50% cut in premium construction, builders are expected to gain a lot.
Many builders claim that the real estate prices of homes will come down too, as the premium cut would mean savings for developers.
Mumbai alone attracts around 22 premiums which is higher than other top metro cities.
For example, a top developer said, “The move of premium cut will lead to reduced cost for home buyers which will make houses more affordable thereby increasing their purchasing power, further underlining the opportune time for them to buy a house.”
Another builder said, “The reduction in premiums will over a period of time will make it a possibility of lower price for new inventories that shall come into the market.”
Developers availing the premium will have to pay the stamp duty for homebuyers.
When asked, Adv Shirish Deshpande, Chairman, Mumbai Grahak Panchayat, on whether he thinks, homebuyers will be passed on the benefit by builders due to premium cut.
Deshpande said, “I doubt. So long as their selling rates to homebuyers are not frozen, builders will be free to hike the prices and recover the stamp duty which is expected to be absorbed by them.”
Niranjan Shetty, Senior Mumbai BJP leader, and former Tree Committee Member, BMC says, “I don’t think so the developers will reduce their rates. Earlier, area’s like balcony which were not part of the FSI and for which the developer never use to pay a single paise after Subodh Kumar came in as Municipal Commissioner, started charging the premium for such constructions, the extra profit margin which was being pocketed by the builder had to be paid as premium. Now the developers will again benefit from this move. In my view nothing is going to change except that the developers will benefit from this kind of exemption.”
