Explained: What does reduction in premium mean? Will it benefit Maharashtra’s real estate developers and homebuyers?
Reduced premiums can make projects viable for developers and help avoid project delays due to funding issues; lower development costs to realtors would mean lower purchase cost to homebuyers, which in turn can help boost demand.
Premium typically refers to the charges that are levied by the state with respect to approvals for initiating, progressing, and completing the area or additional area in a project.
After reducing stamp duties in the state from 5 percent to 2 percent until December 31, 2020, to boost residential sales, the Maharashtra government is now contemplating reducing the premiums on real estate projects by at least half, following recommendations of the Deepak Parekh Committee.