The Maharashtra government announced a 50 per cent waiver on the premium payable by real estate developers for its cluster development policy in Mumbai for a period of one year. Maharashtra Chief Minister Eknath Shinde told reporters that the government’s decision would encourage redevelopment of old and dilapidated buildings in Mumbai city
The Maharashtra government on May 30 announced a 50 per cent waiver on the premium payable by real estate developers for its cluster development policy in Mumbai for a period of one year. It is a move that is expected to help in the redevelopment of old buildings in the city. Maharashtra Chief Minister Eknath Shinde told reporters during the announcement after the state cabinet meeting that the redevelopment of old and dilapidated buildings in Mumbai city would be encouraged.
Shinde said, “In Mumbai, we have decided to give impetus to cluster development. This will ensure redevelopment of hundreds of old and dilapidated buildings. For this, we have decided to give 50 per cent discount on the premium for redevelopment of such buildings. Has done. This will benefit lakhs of citizens.”
Speaking to reporters after the cabinet meeting, Deputy Chief Minister and Housing Minister Devendra Fadnavis said, “We have launched this one-year-long plan to promote cluster redevelopment in the city. There is also a way to create a stock of more affordable housing. For now we have not kept the scheme open for an unlimited period of time. It will be valid only for those proposals which fall within a period of one year.”
What is cluster development?
A cluster development policy is one where multiple plots or buildings are taken up for redevelopment by forming clusters together. Under this, the state government provides various relaxations including additional floor space index (FSI) to the developers. It focuses on the redevelopment of old buildings in the city of Mumbai. Another such relaxation would now be 50 per cent premium waiver. There are about 300 extremely dangerous buildings in Mumbai and the number of dilapidated buildings runs into thousands.
What is premium?
Premium is the fee charged by the authorities in respect of grant of approval for starting, expediting and completion of area or additional area in a project. These include fungible premium, premium paid for FSI (floor space index), premium for lack of open space, premium paid for covering more land for construction, premium to be charged on lobbies, lift wells, stairs, etc. Are included.
In Mumbai, there are more than 20 types of premium that is paid by a developer to the authorities. A developer, on the condition of anonymity, said that around 20 to 30 per cent of the project cost goes towards paying these premiums.
The Maharashtra government had announced a waiver of 50 percent for various premiums in January 2021 for all types of projects. However, this would be applicable for those developers who were willing to pay the balance 50 per cent premium upfront.
25 to 30 big real estate developers will get its benefit
Meanwhile, reacting to the government’s decision, a developer from Mumbai said, “We had demanded that the state government should cut the premium in all types of real estate projects by 50 per cent. However, only cluster development projects are being considered here.” This move will only benefit 25 to 30 big real estate developers in the city. There is nothing in this scheme for small developers or medium-sized developers.
