In a bid to make self-redevelopment of old buildings in Maharashtra more viable, the state government announced a significant reduction in stamp duty for co-operative housing societies opting for self-redevelopment projects. As of July 14, these societies will now only have to pay a nominal Rs 1,000 as stamp duty for the allotment of apartments in newly-constructed buildings to existing owners. This move is expected to reduce the overall project cost by approximately 7%, providing a much-needed boost to the real estate sector.
Before this decision, the prevailing stamp duty for property transactions in Maharashtra ranged between 5% and 7% of the total agreement value, depending on the city and district. With this new policy, the reduction in stamp duty will result in substantial savings for housing societies and flat owners, enabling them to allocate more funds towards the actual redevelopment process, including infrastructure improvements and amenities.
Developers and experts in the real estate industry have lauded the government’s initiative, stating that it will undoubtedly make self-redevelopment projects more cost-effective. By incentivizing housing societies with lower stamp duty costs, the government aims to encourage more societies to opt for self-redevelopment, ultimately revitalizing the urban landscape in the state.
However, despite the stamp duty reduction’s positive impact on project costs, there remain challenges to address. One significant obstacle is the financing of self-redevelopment projects. Experts point out that not many financial institutions are currently willing to finance such projects, even when housing societies have taken over the project following an order from the Maharashtra Real Estate Regulatory Authority (MahaRERA) against a defaulting developer.
While the intent behind the stamp duty cut is commendable, developers believe that addressing these financial concerns is crucial to ensure the success of self-redevelopment projects. Traditional financing models often involve personal and corporate guarantees from developers, which are absent in projects managed by housing societies, creating a sense of insecurity among lenders.
In response to these challenges, the Maharashtra Deputy Chief Minister, Devendra Fadnavis, directed the state administration on May 8, 2023, to fast-track the implementation of the self-redevelopment policy approved by the government back in 2019. As part of this directive, the government plans to establish a dedicated single-window clearance in Mumbai, aiming to process applications within three months. Such streamlined processes could potentially attract more investors and lenders to support self-redevelopment initiatives.
Despite the hurdles, real estate experts remain optimistic about the future of self-redevelopment in Maharashtra. With the recent stamp duty reduction and the government’s commitment to expediting approvals, the state’s urban landscape may witness a transformation as more housing societies consider taking charge of their redevelopment projects. Only time will tell how successful this approach will be, but it certainly marks a step in the right direction for the housing sector in Maharashtra.