Your dream house may cost you a bomb. It could significantly push your costs to build a new house, if a cabinet decision by the Madhya Pradesh government on Tuesday, is any indication to go by.
The state cabinet on Tuesday hiked royalty on basic building materials such as sand and granite by about 100% which would result in cost escalations.
For instance, the royalty on sand has been increased from present Rs 53 to Rs 100 per cubic metre. Similarly, royalty on marble used for tiles and blocks would now be charged at Rs 1,000 from earlier Rs 700 per cubic metre.
Home buyers and realtors have severely criticized the hike, saying the increase will adversely impact the real estate sector in the state, already reeling under a huge slow down.
The realtors' body – the Confederation of Real Estate Developers Association of India (CREDAI)—criticizing the state government’s decision, expressed fears about vendors manipulating the situation.
"In theory, the increase in royalty should not impact the retail rates much but experiences show that vendors would take full advantage of the situation and increase the rates substantially," said association spokesperson Manoj Singh.
"Government should adopt some measures to keep strict vigil on the vendors so that prices remain under control."
The government justified the hike, saying it would not result in any escalation in construction costs.
The royalty on minor minerals has been revised after more than four years, following recommendation by a committee, which studied the market rates of the minerals — which are sourced locally from different pockets in the state, it said in a statement announcing the hike.
"I don’t know why government is targeting the real estate sector," said Jamil Qureshi, a builder.
"We already pay 8% service tax. Increase in royalty on building material is like adding insult to injury."
Qureshi said after the increase in royalty, he would have to shell out Rs 35 per cubic feet of sand instead of Rs 20.
Bricks too, would be dearer by Rs 1,500 per truck.
"The increase, will obviously be passed on to the buyers," the trader pointed out.
Sanjay Goel, who was unaware of the government’s decision and is constructing a house in old city area was taken by surprise.
"Building a house today is a challenging job," said Goel.
"Government has no mechanism to control inflation and I observe a change in rates every time I buy some building material like murram, sand or bricks."
"I am sure retailers would make the most of government’s decision making things more challenging for me."
At a glance
The royalty on sand has been increased from Rs 53 to Rs 100 per cubic metre.
Similarly, royalty on murram has been hiked from Rs 27 to Rs 50.
Royalty on boulder has been increased from RS 35 to Rs 40, while on gravel road metal; it has been increased from Rs 44 to Rs 100.
Royalty on marble floor tiles and blocks would now be charged at Rs 1,000 from the earlier Rs 700.
Royalty on marble slab has been increased from Rs 200 to Rs 500.
Granite’s royalty has been hike to Rs 2000 from Rs 1,500.