Ailing realty sector sees a silver lining after MHADA cuts premium, defers payment of development cess for 2 years
BL Soni

As good news for the ailing realty sector, the state-run Maharashtra Housing and Area Development Authority (MHADA) has reduced the premium payable by developers undertaking the redevelopment of its colonies. Further, the development cess payable by the developers will not be recovered for 2 years.

MHADA, which is now a planning authority, has proposed a stamp duty of Rs 1,000 for the tripartite agreement to be executed for the redevelopment of BrihanMumbai Municipal Corporation’s (BMC) old and dilapidated buildings. In addition, it has come out with an installment policy for the payment of various premiums payable to it.

Housing Minister Jitendra Awhad told the Free Press Journal, “MHADA has sent these proposals to the state government after the discussions held three months ago with realty sector bodies, including CREDAI-MCHI and NAREDCO. The government notification is expected within 72 hours. These decisions will provide a much needed relief to the realty sector for its revival.’’

The revised premium for 0 to 2 and above 6 land rate/rate of construction ratio for economically weaker section/lower income group homes will range between 20 per cent and 28 per cent from the earlier 40 per cent and 55 per cent. For medium income group homes, it will be between 45 per cent and 56 per cent against the 60 per cent and 75 per cent charged earlier. For high income group homes, it will between 60 per cent and 71 per cent against 80 per cent and 95 per cent. MHADA has proposed to provide a level playing field to ongoing and new projects by these revised premiums payable by developers for the period between August 20, 2019, and August 19, 2021. It will issue a revised letter for the built up area for which a no objection certificate is not issued. In cases where NOC has been issued, no reduction for the NOC area will be applicable. This will ensure that existing ongoing projects are able to compete with the new projects undertaken after August 20, 2019.

Further, MHADA has requested the government for the reduction in premium rate for floor space index (FSI) by 50 per cent for a period of two years. This is expected to increase the number of redevelopment proposals so that the effective annual recovery of the premium by MHADA will not be affected.

The state government had reduced the premium only by 25 per cent in August 2019. Therefore, MHADA has made a fresh appeal to the government to reduce it by 50 per cent to facilitate the redevelopment of MHADA colonies.

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Free Press Journal