While chief minister Prithviraj Chavan said the municipal commissioner Subodh Kumar’s proposal to charge a higher premium on the free-of-floor-space-index areas would not increase property prices, developers insisted rates of flats would go up by at least 10%.
The proposal sent to the state government by the civic chief says a developer would be allowed to build an extra 25% above the sanctioned FSI in a residential project, for which they would be charged 100% premium. Simply put, the builders will be asked to pay separately for common areas like passages, car decks and lobbies among others. Builders are expected to pass on the cost to the buyers and houses in new constructions will become more expensive.
On Wednesday, Chavan told HT, “It’s wrong to say premium will hike flat prices. Builders already pay premium for certain areas that are sold as part of super built-up areas.” However, Chavan didn’t specify how the government would ensure builders don’t shift the extra burden on to homebuyers. He insisted other states had adopted similar methods and did not face any price hike in flats.
Developers pointed out ground realities. “It is obviously going to affect the rates of flats as things given to us for free will be charged and the cost will be passed on to the consumer,” said Sunil Mantri of Mantri Realty.
He said when Kumar was in the process of formulating the modifications he had met Maharashtra Chambers of Housing Industry (MCHI) members and they had suggested a 50% premium. “If the premium hike was 50% we would have absorbed it,” Mantri said.
Kumar, on Wednesday, said these modifications would bring in transparency and curb serious misuse by developers. He also said the money earned (Rs2,500 crore a year) would be diverted for infrastructure work.
Boman Irani, secretary MCHI, said, “We had suggested they keep certain mandatory areas free of FSI and that the premium be charged according to the nature of amenity.”
Anand Gupta, general treasurer of Builders Association of India (BAI) said charging 100% premium on areas covered by staircase, lobby, flowerbed, would push up sale price of flats.
Sources said the CM would approve of the proposal in the coming cabinet meeting and amend the development control rule for Mumbai, possibly in the monsoon session of the state legislature that begins on July 25.