Property Prices May Soon Come Down by 20 Percent Latest News

Builders may start offering 20 per cent discount on property prices to home buyers. The reason they can afford this discount is because of the lesser number of permissions required now; the normal time for passing a file has also been fixed at 60 days. Builders claim that with faster permissions and lesser number of them required, their budget will come down by around 30 per cent and hence they can pass on the benefits to customers up to 20 per cent.

mid-day's report on January 3 titled 'Half-way meet for BMC and builders' had said how BMC, in its new rule booklet on construction permissions for builders and real-estate developers, has decreased the number of permissions from 119 to 58, and reduced the time required to acquire them to 60 days.

According to a senior architect, who works closely with the Building Permissions Department of the BMC, builders spend an average of Rs. 1,000 for every square foot for permissions. With new permissions reduced to 58 from the existing 119, the amount will come down to Rs. 700 to Rs. 800 per square foot.

Arqam Shaikh, owner of ARC Associates, an architectural firm working in South Mumbai, told mid-day, "Normally the expenditure (on permissions) is up to Rs. 1,000 per square foot, but with lesser number of permissions, the amount will go down to Rs. 700 per square foot. Also, the biggest hurdle is that it takes more than four months to get files passed. If it's reduced to two months' time, builders will get to save a lot of money."

Builders claim they have no issues in passing the benefits to homebuyers in Mumbai, provided that the bureaucrats stick to this policy.

Anand Gupta, spokesperson for Builders Association of India, said, "Approval takes more than a year or two, this means that the builder is losing money. If approvals are given in 60 days, naturally there will be substantial reduction in price, and we will be able to give the end user a discount up to 20 per cent."

According to Shaikh, maximum permissions are required from the Building Proposals Department and the new rules will reduce the visits of architects and builders to this particular department. He claims the most cumbersome permissions are those required from the Fire Department, which remain as they are.

According to a source, builders buy the land and as permissions take years together to come, the interest on the money spent to buy land keeps accumulating - this is the biggest reason why they increase prices.

"When we don't have to spend more, why will we charge the customer? Again, lesser permissions mean that the file goes through lesser number of hands. This means lesser greasing of palms," said the builder.