`Premium plans for extra FSI may hit redevpt projects'
TIMES NEWS NETWORK
Will Be Pegged To '15 Ready Reckoner Rate, Govt Aims To Raise `5,000 Crore
The state hopes to raise Rs 3,500 crore to Rs 5,000 crore by charging a premium on additional floor space index (FSI) sold to builders across Maharashtra, said state finance minister Sudhir Mungantiwar on Wednesday .
Later speaking to mediapersons, chief minister Devendra Fadnavis said the premium rate charged so far was frozen at the ready reckoner (RR) rate of 2008.Developers, though, had submitted affidavits that as and when the rate is increased, they would pay the difference to the government.
Fadnavis said developers did not pass on the benefit of the low premium rate to consumers. “We are now demanding our share from the money that is pocketed by builders,“ he said.
The CM said the premium will be based on the RR rate of the current year. He said it is still to be decided whether it should be applied in phases across the state.
Till date, the government sells premium FSI at around 30% of the property RR rates of 2008. The government has now decided to fix the new price linked to the 2015 RR rates and charge builders 60% of these.
Last month, Fadnavis had told TOI his government hoped to earn annual revenue of around Rs 7,000 crore through this sale. “Builders currently buy this at Rs 4,000 a sq ft, but sell their apartments at Rs 20,000 a square foot. Why can't our government earn more revenue out of this?“ he had said.
Builder Sunil Mantri said the increase will hit redevelopment projects. In Bandra, for instance, the government's premium on FSI could be as high as Rs 9,000 a sq ft, he added. “This will make redevelopment projects financially unfeasible for builders.“
Construction sources said the move will benefit a cartel of private players who deal in this premium FSI, more commonly known as TDR (transfer of development rights). “If private players sell it at Rs 5,000 to Rs 6,000 a sq ft at present, why would any builder shell out Rs 9,000 a sq ft to buy it from the government?'' they said.
Developers have the option of buying 33% of TDR, also known as premium FSI, from the government at a cheaper rate than what private sellers charge. The rates are bound to change market equations. Today , a developer constructing in the suburbs can use 1 FSI and load an extra FSI of 1 by buying TDR from the market. In 2008, the state decided to sell 33% of this TDR as premium FSI so that builders' dependence on private players reduces.Now, it plans to sell 67% of this TDR as premium FSI. TDR, mainly generated from slum redevelopment, is available for Rs 6,000 a sq ft.
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