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Mumbai home market to get boost from lower development levies

Mumbai

HOMES are likely to get cheaper in India's costliest housing market of Mumbai, as the state government has decided to reduce developmentrelated levies by as much as 50 per cent until December 2021.

Maharashtra state has cut various levies on construction projects by about half on suggestions of a government-appointed committee headed by Deepak Parekh. Mr Parekh is the chairman of Housing Development Finance Corporation, India's leading housing finance company.

The move will likely bring down development costs for most builders and result in lower home prices for buyers.

"The reduction in premiums for new launches will help development at lesser input cost and, over a period of time, there is a possibility of lower price for new inventories that shall come into the market," Niranjan Hiranandani, the president of National Real Estate Development Council, said in a statement.

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Due to scarcity and high cost of land in Mumbai, developers prefer to build vertically, often more than what the ratio of floor space to total plot area allows.

Developers pay a variety of charges for being able to build more, including premiums for more floors and deficient open space. The Parekh committee said Mumbai had 22 different levies, the highest among Indian cities.

The move follows the state government cutting local tax on home purchases by around 60 per cent last year, leading to an 80 per cent jump in Mumbai home sales in October-December. BLOOMBERG

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