Developers to pay premiums for less open space around buildings
Real Estate

Developers to pay premiums for less open space around buildings

The Brihanmumbai Municipal Corporation (BMC) is collecting a sheer amount of money from builders to allow them concessions in the development rules.

Developers have to pay a premium for leaving less open space around buildings, converting industrial areas into residential or commercial, providing a few parking zones, reducing the width of the stairs, no amenity spaces, reducing the size of artificial ventilation, among others.

Overall, ten different categories of norms on using the space and builders sought compromise on one or the other.

When BMC is facing a financial crunch, its collection of premiums from builders will overtake property tax as its major source of revenue.

Till August, BMC had collected Rs 4,800 crore as premiums from builders, compared to Rs 627 crore in property taxes. According to an official, the civic body expects to collect Rs 9,000 crore as premiums by the end of March 2022. It will be the highest ever revenue collection as premiums for BMC. Rs 4,800 crore premium is already more compared to Rs 2,107 crore collected in the previous financial year.

It is also a reason why the state government is providing a 50% discount on premiums now. Builders will have to pay even less for cutting open space around buildings, providing less parking space, shorter stairs and developing the high-raised infrastructures in smaller areas.

According to a developer, no buildings in Mumbai can be constructed without concessions or premiums due to less or no space. Most times, there is no space for parking slots, so concessions have to be taken for those. But in many high-raised building projects, premiums are to be paid for getting more space and building more in smaller areas.

The centre had issued a government resolution (GR) reducing the premium cost by 50% after the cabinet approved the proposal.

They will pay premiums on the Ready Reckoner (RR) rates of 2019 or 2020. Due to the discount, builders will have to provide an undertaking to the local bodies that they will pay the entire stamp duty without charging stamp duty from homebuyers. This scheme is valid for both new and old projects till 31 December 2021.

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Also read: Developers encash rising demand for plots, led by soaring IT salaries

The Brihanmumbai Municipal Corporation (BMC) is collecting a sheer amount of money from builders to allow them concessions in the development rules. Developers have to pay a premium for leaving less open space around buildings, converting industrial areas into residential or commercial, providing a few parking zones, reducing the width of the stairs, no amenity spaces, reducing the size of artificial ventilation, among others. Overall, ten different categories of norms on using the space and builders sought compromise on one or the other. When BMC is facing a financial crunch, its collection of premiums from builders will overtake property tax as its major source of revenue. Till August, BMC had collected Rs 4,800 crore as premiums from builders, compared to Rs 627 crore in property taxes. According to an official, the civic body expects to collect Rs 9,000 crore as premiums by the end of March 2022. It will be the highest ever revenue collection as premiums for BMC. Rs 4,800 crore premium is already more compared to Rs 2,107 crore collected in the previous financial year. It is also a reason why the state government is providing a 50% discount on premiums now. Builders will have to pay even less for cutting open space around buildings, providing less parking space, shorter stairs and developing the high-raised infrastructures in smaller areas. According to a developer, no buildings in Mumbai can be constructed without concessions or premiums due to less or no space. Most times, there is no space for parking slots, so concessions have to be taken for those. But in many high-raised building projects, premiums are to be paid for getting more space and building more in smaller areas. The centre had issued a government resolution (GR) reducing the premium cost by 50% after the cabinet approved the proposal. They will pay premiums on the Ready Reckoner (RR) rates of 2019 or 2020. Due to the discount, builders will have to provide an undertaking to the local bodies that they will pay the entire stamp duty without charging stamp duty from homebuyers. This scheme is valid for both new and old projects till 31 December 2021. Image SourceAlso read: Developers encash rising demand for plots, led by soaring IT salaries

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