Mumbai builders urge Maharashtra government to cut premium charges

MUMBAI: Mumbai’s top real estate developers have urged the state government to reduce the premium charges, which they have to pay under different heads, citing liquidity crunch.

Developers are seeking reduction in charges related to open space deficiency premium, staircase, lift and lobby, among other levies.

After a meeting with Maharashtra chief secretary Ajoy Mehta on Thursday, they told ET that developers may be forced to stall ongoing housing projects if the government does not relax certain conditions.

Nayan Shah, president of the Confederation of Real Estate Developers Association of India (Credai) and the Maharashtra Chamber of Housing and Industry, told ET that member-developers met government officials as the industry is passing through one of its toughest phases.

“All the developers are facing a severe cash crunch; forget beginning work on new projects, there is no money even to execute ongoing projects,” Shah said. “The government should give us some relief or else even the ongoing projects would come to a standstill.”

Nayan Shah said developers are seeking a relaxation in the charges levied for redevelopment projects and there is scope for the government to reduce it.

“If I am executing a redevelopment project, then out of the 22 floors, 11 are meant for the slum dwellers/old occupants of the previous building. The state can levy the normal rates that they levy for the 11floors which will be for commercial sale. However, the rest of the 11 floors are homes for the old occupants, so the same premium charges should not be charged for this component,” Nayan Shah added.

In a letter to the state government, the developers have also sought reduction in the interest component of the premiums that the Brihanmumbai Municipal Corporation charges.

Currently, developers have to pay 10% of the total premium upfront. After 12 months, they have to pay the rest in three yearly installments at 12% interest.

Those who can’t pay the 30% are given three months’ time. However, the civic body charges 18% interest. The developers have sought to bring this down, saying it is unsustainable for them to pay this amount in the midst of a liquidity crunch. Developers want deferment of delayed payment as well.