To boost the real estate sector hit by the coronavirus pandemic, Maharashtra government on Wednesday decided to reduce all premiums related to the sector by 50%. The new move will be applicable till 31 December, 2021.
All projects which want to avail of the premium concession will have to pay full stamp duty for the customers till 31 December. High premium used to put a financial burden on developers leading to higher costs for the homebuyers. The reduction in premium cost is expected to help in softening property prices, if these reductions are passed on to the homebuyers, thereby renewing buyers’ interest.
The concession will be considered for premium rates whichever is higher, 1 April 2020, or the current annual market price table. The number of premium and amount is the highest for financial capital – Mumbai, it amounts to almost 25-35% of project cost for the developers. For instance, in Bengaluru developers have to pay 10 different premiums and charges, it is five in Delhi and just three in Hyderabad.
The Maharashtra government earlier slashed the stamp duty charges. Usually payable on the sale agreement, the stamp duty rate is fixed by the state governments. The stamp duty from 1 January, 2021, until 31 March, 2021, will be 3%.
While reacting to the breaking news of State cabinet to approve Reduction in premiums, Dr. Niranjan Hiranandani, President NAREDCO, gladly said,
“It is a great bolstering move made by the state government by sealing approval to reduce premiums by 50% under the new DCPR rule 2034 across the board for on-going and new projects upto Dec 312021. 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. Also, 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.
It is a move expected to meet the urgent need for economic activity and generating employment. The industry will be injected with additional liquidity in the backdrop of cumulative policy reforms due to Covid pandemic, which has been considered as a ‘force majeure’ situation by the Government of India. This reduction in premiums will help in quick turnaround of projects and uplifting Industry sentiments.”