Maha govt's move to cut premiums on realty projects to boost housing demand: CREDAI & Naredco

Realtors apex bodies CREDAI and Naredco on Thursday hailed the Maharashtra governments decision to cut premiums charged on realty projects, saying it will lead to reduction in construction cost and boost property demand.

Realtors' apex bodies CREDAI and Naredco on Thursday hailed the Maharashtra government's decision to cut premiums charged on realty projects, saying it will lead to reduction in construction cost and boost property demand. On Wednesday, the Maharashtra government cut premiums levied by the civic bodies on real estate development by 50 per cent till December 31. However, the reduction in premium can be availed only by those developers who will bear homebuyers' stamp duty burden. ''The 50 per cent cut in various premiums levied by the Maharashtra government on construction projects till December 31, 2021, is the first-of-its-kind step taken by the state government,'' CREDAI National Chairman Jaxay Shah said. ''We hail the proactive and progressive measure as it will have a strong impact on investments in the affordable housing sector and will benefit all the partners and stakeholders in the realty ecosystem, the homebuyers and the 250 allied industries that are reliant on real estate,'' Shah said. The CREDAI Chairman said this will benefit the homebuyer as developers availing the scheme will pay the stamp duty on behalf of the homebuyers. Shah thanked the Maharashtra government led by Uddhav Thackeray for taking various measures to revive realty sector including the reduction in stamp duty. He said it is imperative that the sector receives similar nationwide support and requested other state governments to emulate the Maharashtra policy. Naredco President Niranjan Hiranandani said: “This move will go a long way in expediting the project completion and the industry will witness new launches in the market. The industry applauds this booster dose making many projects viable and we shall adhere to the rules laid down in lieu of availing these benefits.'' He 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. Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger, said: ''Reduction in real estate premiums by 50 per cent in Maharashtra will provide a further boost to the sector in the state.'' The reduction in premiums would help the Mumbai market as the city collected as many as 22 premiums under various heads, which is higher than other top cities, he added. ''High premium puts a financial burden on developers leading to higher costs for the homebuyers,'' Rangarajan said. In the current economic scenario, he said the step would ease the burden and soften the prices resulting in more sales in the coming months

Sunteck Realty CMD Kamal Khetan said the decision coupled with reduced stamp duty cost would help the sector witness accelerated sales due to the feasible home prices in the upcoming time. ''It would incentivise the purchasing decision of the homebuyers and boost the residential real estate demand,'' he said. Ram Raheja - Director, S Raheja Realty said, this move will certainly boost the existing demand in real estate. ''Especially in cities like Mumbai, the cost of land is high and therefore a cut in construction cost will be a huge relief for developers who have been dealing with low margins. Also, there will certainly be a passing on of the benefit in terms of the price which will lead to increased interest from fence-sitters,'' Raheja said. Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, said this decision will benefit the supply side immensely. ''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 has been selling slowly,'' he said.