Good news coming from the Maharashtra-based real estate sector! There will be a cut of 50 per cent in the premiums – a news that was first reported by Zee Business. Managing Editor Anil Singhvi gives his take on the issue as he tells viewers how much the home buyers will benefit from this move. 

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The Market Guru said that the biggest problem being faced by the real estate sector is the 50 per cent premium payment requirement for the developers to the state government. He said that 50 per cent is what the builders are saying, but it could be assumed that the premium would be around 40 per cent, Singhvi said. 

See Zee Business Live TV Streaming Below:

Will this have a significant impact on the cost for the ongoing and new projects? The Managing Editor said that this premium has a huge impact on the price of the flats as the upfront payment to the government escalates the overall cost of the houses. The builders cannot compromise on the construction cost, he added so they argue that the prices are therefore, high.  

He welcomed the decision by the Maharashtra Government. He said that the premium accounts for at least 20 per cent of the total cost of the flat and if the premium is reduced by 50 per cent then the total cost could come down by around 10 per cent.

Watch Zee Business Tweet Video Below:

But are there windfall gains in offing? 

The question is, will the builders pass on the benefit to the home buyers? He said that he did not expect a price cut as the demand is now building up. He said that this is a demand-supply game. But there is now a cushion for builders, he further said. 

Also, the question is if the cut is applicable for the new projects? If it is for the new projects, the gains are not significant. Nobody is interested in the upcoming or under construction projects, he said.  

The Market Guru said that the ready-to-move houses are now available at prices that were earlier quoted for under construction flats.  

And it does not apply for old projects as the money that has already been collected by the government is unlikely to go back to the builders.        

There could be some reduction in prices for the new projects. So, there is some benefit on the cost front for the home buyers of new projects, but it is not a significant one, he added.  

Another rule is that the stamp duty will now be paid by the builders. But in the current setup there is a package deal that is offered by the builders that includes all the cost including stamp duty, parking fees. There will be no material impact on the cost because of this, he opined.