Realty sector in a mess due to govt policies: Developers
The builder community has not yet recovered from the recent suicides of two developers. It has blamed the government for the current mess the real estate market is finding itself in.
“Delay in approval escalates the cost of the project. Also, before starting a project, we have to shell out for fungible floor space index and development charges and taxes. We have to pay for these things irrespective of the project’s success,” said a developer from South Mumbai.
He added that each year the government increases the ready reckoner rate. “There are some locations where government rates are equal to the market rates. Decreasing property prices is not an option in today’s times, we have to sustain the business. So we pay all that we are supposed to and then pass the additional cost to buyers, who end up paying 20% of their apartment cost on various government taxes. Due to these factors, today, most of the buyers are feeling that developers are not constructing affordable flats. The reality is we want to do that, but the government is making it difficult,” he said.
Another developer blamed the government for the high land cost. “After mills shut down, the government, instead of using that land building affordable houses, sold it at a high cost in auctions. Also, Cidco too is releasing and selling plots through bidding. The government has gotten into the money-making business. But it wants us to reduce property prices and construct affordable homes. Land is the only major component while deciding house price.
If we get land at a reasonable price, we will able to sell the apartments at affordable rates,” he explained.
He also pointed out the money they have to spend greasing the palms of officials concerned to push the project files to the next table. “The corruption money is unaccounted for, which we have to raise from private moneylenders.
If we do not give them, they sit on the files for no reason or raise trivial doubts and queries. We are really fed up with the system and want an overhaul of it,” the developer said.
President of the Builders Association of India Anand Gupta said they had requested the government several times not to increase the taxes and RR rates, yet officials went ahead and made the announcements.