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.”

Also Read: Homes To Get Cheaper In Mumbai Read To Know How

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By Varun Singh

On Wednesday a developer in South Mumbai celebrated because now he will save Rs 3 crore that he would have earlier paid in form of construction premium to Municipal corporation.

The state government on Wednesday announced a 50% cut in the premium charges to be paid by developers to the municipal body.

According to Ashok Mohanani, President, NAREDCO Maharashtra, Mumbai alone attracts around 22 premiums which is higher than other top metro cities. 

All developers have claimed that this will lead into reduction in home prices. Developers say less premium payment the benefit will be passed on to home buyers.

This is what some top developers have to say on home prices getting reduced because of the cut in premiums.

“We welcomes the decision of the Maharashtra Government to reduce the construction premium by 50 percent. It will give a big respite to the developers, as the cost of premium as well as approval cost contribute 35 to 38% of the project cost, whereby the project cost will come down substantially,” said Mohanani.

Projects that wish to avail the benefit of concession will have to pay the full stamp duty on the sale of flats, whereby the consumers will get direct benefit of this concession, granted by the state government. 

Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd said, “The decision coupled with reduced stamp duty cost would help the sector to witness accelerated sales due to the feasible home prices in the upcoming time. It would incentivize the purchasing decision of the homebuyers and boost the residential real estate demand.”

Dr. Niranjan Hiranandani, President NAREDCO, said, “The reduction in premiums for new launches will help the development at the 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, CREDAI MCHI, said, “This move will lead to reduced cost for home buyers which will makes houses more affordable thereby increasing their purchasing power, further underlining the opportune time for them to buy a house.”

Also Read: 55 Projects See Change Of Promoter Since 2018

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