A month after the Brihanmumbai Municipal Corporation allowed the builders of the residential real estate sector to pay the premiums and construction fees in a system of equated instalments, the Maharashtra Chamber of Housing Industry (MCHI-CREDAI) has now asked for further reduction of the first instalment. While the BMC is yet to give a formal approval, senior civic officials said they would accept their demand only if builders agreed to pay a higher rate of interest.
With the aim to boost the sluggish real estate projects, the members of MCHI-CREDAI had taken their demands to the BMC. Even though the BMC had refused to reduce the rate of premiums, the civic body had agreed to allow builders to make the payments in an instalment-based system on the condition that builders would have to pay an interest of 12 per cent from the second installment onwards.
The secretary of MCHI-CREDAI, Domnic Romell, said they requested for a reduction in the first instalment in order to help the people who have invested in projects that have been long stalled due to various policy changes like demonetisation and introduction of the Goods and Services Tax. “A lot of public money is stuck in projects which are stalled due to payment of premiums and smaller developers are unable to find the funding to make the payments. The modification of the instalment system will be a holistic solution instead of a piecemeal option and will help to get over the transitional period after the implementation of GST and demonetisation,” he said.
In a letter sent to Municipal Commissioner Ajoy Mehta on September 4, the MCHI-CREDAI put in a request of modifying the payment structure and reduce the first instalment to 10 per cent of the total payment. As per their request, for projects involving buildings less than 70-metre high, the first instalment should be 10 per cent followed by 45 per cent as the second instalment at the end of a year and 45 per cent as the third at the end of two years. In the previous instalment system, the break up was 33 per cent in the first instalment, 33 in the second and 34 in the third.
Similarly, for projects involving buildings more than 70-metre high, the first instalment should be reduced to 10 per cent followed by 30 per cent in the second, third and fourth instalments. In the previous system, the builder could pay in four instalments of 25 per cent of the payment. The system of instalments applies around 10 such premiums, including open space deficiency, fungible floor space index among other concessions.
“We have considered their request and it is feasible only if they agree to a higher rate of interest, which will be increased from 12 per cent to 15 per cent since we need to collect revenue as well,” a senior civic official said, adding that a proposal for the same will be put up to the municipal commissioner and a decision is expected in another two weeks.