Good News For Home Buyers As Maharashtra Govt Cuts Construction Premiums By 50 Percent For Builders

uddhav thackeray
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Pune, January 6, 2020: The Maharashtra government today slashed premiums and levies on construction by 50 percent till December 31, 2021, boosting the real estate sector across the state.

The real estate sector has been badly affected by the economic impacts of the COVID-19 pandemic. Hence, in a bid to boost the sector, the government has approved a reduction in premiums by 50 percent under the new Development Control and Promotion Regulations (DCPR) rule 2034 across the board for on-going and new projects up to December 31, 2021.

Premiums are usually multiple charges that are levied by the state government for approving initiating, progressing, and completing the area or additional area in a real estate project. The premium reduction and stamp duty charges will be borne by the developers that will reduce the cost for homebuyers.

Industry experts and realtors have lauded the government’s efforts to give a push to the sector and are expecting an increase in new projects and sales in the coming months.

“The move was required and is like icing on the cake for the real estate sector, especially in Maharashtra. After the steep, temporary reduction in stamp duty charges, the 50 per cent reduction in premium payments until December 2021 will benefit the supply side immensely,” said The Guardians Real Estate Advisory Chairman Kaushal Agarwal.

“It will also help developers pass on further benefits to homebuyers, invigorating demand for real estate projects that are under construction. This move is likely to propel developers to offer extended payment holidays and also give lucrative price proposals to buyers in projects where the inventory sales have been slow,” Agrawal said.

“While the COVID-19 pandemic and subsequent lockdowns made developers focus on completing existing projects and largely postpone launching new ones, having different kinds of premiums and levies is going to make developers contemplate to launch new projects,” Agrawal further noted.

“The reduction in real estate premiums by 50 percent in Maharashtra will provide a further boost to the sector in the State. The real estate market has seen an uptick in the State after a slash in stamp duty and interest rate status quo by the Reserve Bank of India (RBI) in the last four months. The reduction in premiums would help the Mumbai market as the city collects 22 premiums under various heads, which is higher than other top cities,” said Mani Rangarajan, Group COO of Housing.com, Makaan.com, and Proptiger.com.

Rangarajan informed that high premiums put a financial burden on developers leading to higher costs for the homebuyers. In the current economic scenario, the step to slash premiums by 50 percent would ease the burden and soften the prices resulting in more sales in the coming months.

“I am looking forward to the further extension of stamp duty waiver for the next few months to revive the demand,” he added.

“We welcome the move by the government to reduce the premiums. It will provide relief to developers’ the cost burdens, thereby, increasing supply at lower prices,” said Gera Developments Managing Director (MD) Rohit Gera.

“It is, however, important to realize that the charges paid for approvals include development charges and other charges under other heads. Effectively, this means the total benefits will be much less than 50%,” Gera added.

In September, the Maharashtra government had lowered stamp duty from the existing 5 percent to 2 percent till December 31, 2020, and pegged it at 3 percent from January 1 till March 31, 2021.