Hit by slowdown, builders want refund of premium paid for extra FSI
With the slowdown hitting the real estate sector, some leading developers who had bought extra Floor Space Index from the Brihanmumbai Municipal Corporation for projects around Mumbai are asking for their premium back reports Bhavika Jain.india Updated: Feb 16, 2009 15:35 IST
With the slowdown hitting the real estate sector, some leading developers who had bought extra Floor Space Index (FSI) from the Brihanmumbai Municipal Corporation (BMC) for projects around Mumbai are asking for their premium back.
After the state government increased the FSI in suburbs from 1 to 1.33 city builders had paid the current market price for taking the civic body's offer of extra 0.33.
FSI is an indicator of how high a developer can build on a plot. An FSI of 2 means the total constructed area of a building is twice the area of the plot.
Now with the completed projects finding no buyers, developers are left with scores of unsold flats and are unwilling to go ahead with new constructions.
This means they have no use of the extra FSI under the current circumstances; the only option available is to ask BMC for the premium back.
Those who have taken back the premium are K. Raheja builders and Vimaladevi Takkar builders who have been returned Rs 30 crore and Rs 22 lakh respectively.
“There have been applications coming from builders to get their premium refunded. We will treat each case individually based on the kind of project and investment made,” said civic chief Jairaj Phatak.
Understanding the situation of the market the BMC has decided to deal with the developers compassionately. Ashok Shintre, chief engineer, development plan said, “We have refunded Rs 30 crore to K. Raheja builders who had planned to construct a residential complex in Powai. And Rs 22 lakh to Vimaladevi Takkar builders for a project planned at Veera Desai Road (Andheri). We have deducted six per cent as refund charges.”