The state government approves reduction on stamp duty for the BIT Chawls redevelopment.
By Abhay Harish Shah, Realty Quarter
The state government has drastically slashed construction stamping charges, especially in the island town between Colaba and Byculla, for builders who redevelop municipal tenanted properties. However, the bonanza is not for the free-sale element but for the rehab part of the project. The aim of this sop is to encourage redevelopment that has now stalled because of bad circumstances of the market.
On 4th June, the State cabinet agreed to reduce the stamp duty on the rehab component to just Rs.1,000. The obligation shall be calculated at 112 times the monthly lease plus 6% of the rehabilitation costs. Sunit Gupta, a valuator, said, “This operates for at least Rs.10 lakh/tenement, which is paid by the developer.
“The consumer is supposed to pay 6% of the market value for the sale component.”
For slum rehabilitation projects a similar concession in stamp duty is already being provided, said sources.
The BMC’s developer and tenant currently attract 2-3% of the stamp duty on a tripartite agreement. The official said, “The reduction in duties would help make a project viable.
According to Chandrashekhar Chore, deputy city commissioner (estates), the BMC has 4,000 such tenured properties throughout Mumbai. About 700 of these were rebuilt. The main characteristics of the properties are the Bombay Improvement Trust (BIT) chawls.
The BMC remains to be the owner of the property after the redevelopment. The land is rented to housing companies, where residents are now owners, said Chore.
“The tenement size currently is about 200 sq ft and the tenants are entitled to 405 sq ft flats after the redevelopment project,” he said. These chawls can be created according to regulations for ancient and decayed structures and for the rehabilitation of clusters. The BMC receives a share in the sales of excess apartments as well as an amenity.
An architect said that redevelopment initiatives in the island town have almost stalled and the new move is too little an incentive. The real estate market is still in a decline.
Pankaj Kapoor (MD) at the Liases Foras Real Estate Research Agency stated that all premiums increased after 2012 in such a way that the developer had no sphere to cut rates for apartments. The state must make taxes reasonable for all end customers if it truly wishes to revive the property industry. Housing supply is primarily in the privately-owned industry, not in projects like Mhada and SRA, he said.