Premium on FSI climbed in Mumbai, homes to end up more costly

Q: Hi, Mumbaikars should now get ready for more expensive homes after Maharashtra Chief Minister issued a notice, expanding both the premium amount and the floor space index (FSI) in Mumbai's rural areas.

Ananya,

27th March 2015

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Replies (4)

It is absolutely true and the reason that Mumbai's suburbs have an inflated inventory of 40000 unsold apartments. The residential market had begun to show some signs of reducing, as developers had started to marginally reduce rates to offload this inventory. However, after this announcement, developers are likely to roll back their decreased rates leading to further drawback in home sales.

Anirudh Patel, Mumbai

29th March 2015

Comment

Hi all,
It is also heard that not only were the revised government FSI rates higher than the TDR rates, the move to increase the government rates had led to the TDR market to hike its rates too. Is it true?

Ketalpujara, Mumbai

28th March 2015

Comment

@Lekshmi,
The notification also climbs the amount of the premium from the previous collected (10-30)% of the 2008 ready reckoner (RR) rate to 60% of the current year's RR rate. The declaration will prompt the premium based on RR rates significantly going up from an average of Rs 800-2000/sq-ft to an average of Rs 3000-12000/sq-ft. The maximum increment in rates would be in areas, for example, Bandra, Juhu, Santacruz and Andheri in the Western rural areas followed by Chembur and Ghatpokar in the Eastern rural areas where the RR rates are relatively higher.

Ravindra Singh,

27th March 2015

Comment

Well Ravindra,
And this additional FSI won't be applicable to slum redevelopment schemes and constructions in Bandra Kurla Complex, both of which already enjoy a high FSI, and to Coastal Regulation Zone areas where development is restricted.

Lekshmi,

27th March 2015

Right Lekshmi,
And I think that main reason of this move comes when the state budget showed a revenue deficit of Rs 3,757 crore, which the government needs to recover by way of new taxation. The state government has been working on possible alternatives to increase its revenue once the local body tax is scrapped in August this year. They want to generate revenues to the tune of Rs 4000 crore.

Ravindra Singh,

27th March 2015

Yeh, i heard that news. This announcement comes after the Maharashtra Budgets proposal to increase the premium on the floor space index (FSI) to generate more revenue. The hiked premium will affect those who bought homes earlier, since builders have been asked to pay dues from 2008.

Lekshmi,

27th March 2015

Comment

HI,
What is FSI-2? What does it means? How the property will become dearer and a burden to home buyers? How much FSI the Maharashtra Govt. has increased?

Ravindra Singh,

27th March 2015

@Ravindra,
A FSI of 2 implies that the area of development ought to be double the region of the piece of land. Developers who buy premium floor space index (FSI) for developing taller buildings will now need to pay the state government according to the current ready reckoner (RR) rates from April.

This move is likely to prompt a general rise in property rates in suburbs as developers will pass on the weight to home buyers. The urban development department notification has expanded the 0.33 FSI, which is conceded to all projects in suburbs on installment of a premium, to 0.60.

Lekshmi,

27th March 2015