Largesse in Andhra Pradesh
The Andhra Pradesh government has drastically cut the registration charges of apartments with a plinth area up to 1,200 sq.ft for two years from January 1, 2009.
This has been done with a view to revive the construction activity that is going through a slump.
Those buying flats in Andhra Pradesh will have to pay only 2.5 per cent on the value of the apartment towards registration charges as against 7.5 per cent that is prevalent now. The registration charges will include transfer duty (two per cent) and registration cost (0.5 per cent).
In addition, the Cabinet has resolved to exempt builders of housing units with a plinth area up to 1,200 sq ft from payment of “building approval fee” and “building permission fee” up to June 2009. In yet another incentive, it decided to allow builders to pay “impact of fee” in case of structures proposed above 15 metres height, in six instalments during the construction period.
The builders, however, would have to begin construction within six months of getting the layout approval and complete the construction in two years to get these fee exemptions and instalment-payment benefit.
The government has said that the incentives would ensure housing to middle class and, at the same time, avoid layoffs in cement, steel and other related industries.
However, this move has evoked a mixed response from the industry.
One of the complaints has been about the restriction on the plinth area. Many of the ongoing projects have a large chunk of apartments with a plinth area over and above 1,200 square feet and the cut down does not apply to these.
Comprehensive policy needed
Even while expressing happiness over the Cabinet decisions, many builders think that a comprehensive policy on lines of the one for the IT sector is all the more desirable.
The Cabinet decision, coupled with the slashing down of the interest rates on home loans, will enhance the buoyancy of the industry and fulfil people’s aspirations towards owning a home.
Even the cap of 1,200 square feet is a clear indication that the government is in no mood to encourage big housing areas. Presuming that the cap is in exclusion of common area of about 150 sq.ft, the decision is definitely an incentive. Every such sop should be directed towards encouraging the buyers.
“I hope that the builders will take the cue and reduce the costs in order to boost the confidence of buyers,” says Ravinder Reddy of the Janapriya Syndicate.
Other builders say that the reduction in registration cost and spreading of the impact fee over six instalments is clearly a good sign. However, relaxation of fee in one specific area will not reduce the overall burden, they feel. They want the other fees such as those paid to the Water Board and Electricity to be also included.
For long-term benefits
In such a scenario, a piece meal approach such as the slashing down of the registration cost will not reap much benefit. With an eye on long term benefits, a comprehensive policy in lines of the one applied to the IT sector is the need of the hour.
The reprieve in terms of the home loan interest rates also does not suffice, as banks do not prefer customers with less than 1,000 square feet layout.
Extension of loans to those with budgets of Rs.15 lakh to Rs.20 lakh will go a long way in addressing the issue. Discussions should be conducted with various forums before coming up with a comprehensive policy.
V. SWATHI
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