In order to strengthen the real estate sector impacted by the coronavirus pandemic, the Maharashtra government on Wednesday agreed to lessen all premiums related to the industry by 50%. It will be applicable till 31 December 2021.
A huge premium imposes a financial burden on developers directing increased costs for the homebuyers. The decrease in premium expense will assist softened prices and renewed buyers’ interest, said analysts.
The coronavirus pandemic had harshly influenced the real estate sector last year. With numerous measures from the central government, state government, and the Reserve Bank of India, the real estate sector saw an uptick in the state. The decrease in premium will support all stakeholders — developers in terms of the lower construction cost for undertakings. For customers, it will enable curtail prices and stimulate demand. For the government, it will assist boost premium, and charge collection as the play is likely to resuscitate squeezed ventures.
“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. In the current economic scenario, the step would ease the burden and soften the prices resulting in more sales in the coming months,” Mani Rangarajan, Group COO, Housing.com, Makaan.com, and Proptiger.com said.
How this move will benefit the developers and homebuyers?
The number of premium and quantity is the greatest for financial capital – Mumbai amounts to almost 25-35% of the project expense. The state government was the first to deliver assistance to the industry.
“This step will be a direct incentive for homebuyers waiting for the right time to invest in real estate. The move is a win-win for developers and end-users. It will lead to a reduction in the project cost for developers,” said Manju Yagnik, VCP, Nahar Group and Senior Vice President, NAREDCO Maharashtra.
“While the pandemic and subsequent lockdowns made developers focus on completing existing projects and largely postpone launching new ones, this move of halving the different kinds of premiums and levies is going to make developers contemplate going back to launching new projects,” said Kaushal Agarwal, chairman, The Guardians Real Estate Advisory.
The Maharashtra government earlier shredded the stamp duty fees. Usually payable on the sale agreement, the state governments fix the stamp duty rate. The stamp duty from 1 January, 2021, until 31 March, 2021, will be 3%. Residential sales in Mumbai, India’s most valuable property market, saw a sharp surge in December.
“The premium reduction, coupled with the stamp duty charges which will also be borne by the developers, will lead to reduced cost for homebuyers thereby increasing their purchasing power – further underlining the opportune time for them to buy a house in MMR,” said Deepak Goradia, president, CREDAI MCHI.
“Look forward to further extension of stamp duty waiver for next few months to revive the demand,” Housing.com CEO added.
“The Maharashtra state government has been the first to provide relief to the industry and other states tend to follow it,” said Krish Raveshia, CEO, Azlo Realty.