The Maharashtra Cabinet on Wednesday approved a 50% reduction in the premium for real estate projects under the new Development Control and Promotion Rules (DCPR) Rules 2034 for new projects running till December 31, 2021.
This includes concessions in premiums charged by all planning authorities / local administrations in the state. The decision comes on the condition that builders will have to pay a premium based on the 2019 ready reckoner (RR) rate or whichever of the 2020 rates is higher.
According to ICICI Securities, various FSI premiums / fungible FSIs and other benefits currently payable are 25-23% of the total plan (including land).
“This process will speed up the completion of the project and the industry will record new launches in the market. This reduction in premiums will help change projects quickly and improve industry sentiment. There will also be a reduction in premiums for new launches. Help development at lower input costs and lower prices are likely for new inventories coming to market in due course, said Niranjan Hiranandani, National President, Naredco.
According to ICICI Securities, with a lower price of the premium, the developer can look at paying the entire approved cost in advance and start a new project at an attractive price, possibly due to cost savings and booking for more sales at the start of the project.
Rohit Gera, Managing Director, Gera Developments, said, “It is important to note that the charges levied on those approved include development charges and fees subject to other heads. This means the total benefit will be less than 50%.”
Post lockdown, the Maharashtra government appointed a committee, headed by HDFC chief Deepak Parekh, to reduce stamp duty and premiums.
In August, the state government had announced a 2 per cent reduction in stamp duty on property registrations for transactions between September 1 and December 31. The tax stamp duty for signing the agreement between January 1 and the end of March will be 3%.