Homes go beyond reach

The Maharashtra state presented its Budget and it was not a good picture, especially for realty sector. The premium on floor space index (FSI) has been hiked and this is expected to jack up the prices further. Already the homes are unaffordable, they just got completely out of reach! Any cost which is imposed on the builder, most obviously, it is collected from the consumers. Thus the state wants to increase revenue for its mulch cow, which is the realty sector but at the very cost of its buyers.  The urban development department notification has increased the 0.33 FSI, which is granted to all projects in the suburbs on payment of a premium, to 0.60. FSI is the ratio of the built-up area of a project to its plot area.

The Govt has also issued the notice to hike the amount of the premium from the previously levied 10 to 30% of the 2008 ready reckoner (RR) rate to 60% of the current year’s RR rate. The move will lead to the premium based on RR rates substantially going up from an average of Rs 800-2,000 per sq ft to an average of Rs 3,000-12,000 per sq ft. This move is obviously to rake in more revenue for the state yet it remains a very detrimental move.

This price hike comes at a time when builders are already facing the brunt of poor demand and trying to lure in customers with a lot of freebies.  Deep discounts, free parking space and even gifts like gold coins and motorbikes probably will not now help these debt-ridden builders out from the deep morass they are in. And the state Govt just pushed them in further!