Developers of Mumbai requested the State Government to reduce premium charges.

By Abhay Shah, Realty Quarter

Top property developers in Mumbai have requested the state government, to cut premium charges, which it has to pay under various heads, mentioning the liquidity crunch.

Developers seek to decrease charges linked to open space deficits premium, staircase, lift and lobby charges, among other taxes.

After a discussion on Thursday with Chief Secretary of Maharashtra, Ajoy Mehta, they said builders might be compelled to stop continuing residential projects unless the government does not relax certain conditions.

Because the industry is passing through the toughest phases the member-developers have met government officials, stated Nayan Shah, president of the confederation of Real Estate Developers Association of India (Credai) and the Maharashtra Chamber of Housing and Industry.

“Each developer is facing a serious cash crunch; forget about starting new projects, even to continue the ongoing projects there is no cash,” Shah said. The government should provide us with some relief, or it will even stop the ongoing projects.

Nayan Shah said developers are seeking to relax the costs levied for redevelopment projects and the government has scope to decrease them.

“If I carry out a redevelopment project, then 11 are structured for the old slum dwellers out of 22 floors of the old building. The government can take the normal rates from the sale of commercial property that they levy for the 11 floors building. The remaining of the eleven floors are for the older occupants, so the same premium charges for this component should not be charged,” stated Nayan Shah.

The developers also attempted to reduce the interest element of premiums charged by Brihanmumbai Municipal Corporation (BMC) in a letter to the state government. Currently, developers have to pay 10% of the total premium upfront. After 12 months, they have to pay the rest in three yearly instalments at 12% interest.

Those who can’t pay 30% will have three months additional time. However, the municipal body charges 18% interest. The developers have tried to reduce the price and say that at the time of a liquidity crunch they cannot afford this amount. Developers also want the deferment of late payment.