MUMBAI: Recent relaxation in payment of premium towards fungible FSI by various authorities though will reduce the financial burden on developers and thus lead to a lot of inventory getting freed for sale, this will not lead to price reduction for home-buyers, say industry experts.
Fungible FSI was first introduced by the BrihanMumbai Municipal Corporation (BMC) in 2012 to bring in added transparency towards usage and development of free FSI.
Recently, the state administration, the BMC and the Slum Rehabilitation Authority had relaxed the payment premium on complementary FSI, to ease financial burden on developers and encouraging them to complete their projects in time.
According to 35 (4) of DC rules,fungible complementary FSI, not exceeding 35 per cent for residential and 20 per cent for industrial/commercial development over and above the total FSI, is permissible by charging a premium.
The premium is 60 per cent, 80 per cent and 100 per cent of stamp duty as per the ready-reckoner rate for residential, industrial and commercial development, respectively. One-third part of the premium is payable to the state and remaining to the BMC.
“Now developers can get their plans approved in lieu of the entire potential regular and fungible FSI at the nominal initial payment to the extent of 16-17 per cent of total payable premium amount.
“Also both the BMC and the state administration have deferred the annul 12 per cent interest payment which is really appreciable,” Dotom Realty managing director Ketan Musale told .
He further said this move has resulted in finalisation of planning of all buildings in the layout which developers have declared to the MahaRERA.
“This decision will help developers manage construction at one go. Also it will free up a lot of inventory, which was otherwise stuck due to the inability of developers to pay the entire premium amount as per the earlier norms,” he added.
Transcon Triumph’s vice-president for sales and marketing Sarojini Ahuja opined that the deferment in payment as a positive step to boost the sluggish real estate industry.
“The entire industry will get a boost as it will not only help ease payment burden but will also help developers complete construction faster because this payment deferment will help in finalizing building layout and its execution,” she said.
Echoing similar views Shree Krishna Group managing director Sundeep Jagasia said introducing the deferred payment plan is not only beneficial for developers but also for the BMC because the civic body will get its payment on time now.
“Since the recent relaxation, many projects got revived as most builders have opted for this scheme since the down payment is only 10 per cent. This move has given a big relief to developers who were stuck due to lack of funds and hence resulted in unlocking a lot of inventory,” he added.
Omkar Realtors director Gaurav Gupta, however said this is a welcome step which will ensue timely completion of projects due to availability of funds at a lesser rate of interest, the premium is recalculated by the SRA as per the latest ready-reckoner rates which will result in higher premium and interest rate if deferment is opted for, which is likely to put additional cost on the builders, negating the other benefits and thus preventing developers from passing the benefits to home-buyers.
“Though it is a welcome move for developers, we don’t feel it will provide any relief to consumers. The positive side of this decision is that developers will be able to deliver projects on time,” another industry expert said.