NEW DELHI: For those staying within limits of the Brihan Mumbai Municipal Corporation (BMC) in a compact home of 500 sq ft and less, the recent announcement by the Maharashtra State Government translates into good news: a waiver of property tax for residential houses measuring up to 500 sq. ft.
Similarly, residential units measuring between 501 sq. ft. and 700 sq. ft. will benefit with a 60 per cent reduction in the tax rate. To qualify for this, the houses must be located within the limits of the BrihanMumbai Municipal Corporation (BMC). The waiver will be implemented with retrospective effect from January 1, 2019.
This will help create a positive sentiment in Mumbai’s property market as also impact acceptance of compact homes within the limits of the BrihanMumbai Municipal Corporation (BMC). It is estimated that around 64 per cent of the residential units within the BMC limits come under this category, this will boost buyer sentiment when it comes to affordable homes, and enhance the acceptance of compact homes measuring 500 sq. ft., said Dr. Niranjan Hiranandani.
“It is a welcome step and will help create a positive sentiment among home seekers looking at buying ‘starter homes’ which the new segment of home buyers, the millennial segment, are focusing on,” he added.
The decision is expected to provide a huge relief to first-time home buyers from economically weaker sections of society, as owners of nearly 17 lakh houses are expected to benefit from the waiver. An estimated 15 lakh houses measuring less than 500 sq ft will be completely exempted from the property tax system. Another 2 lakh houses will be eligible for a 60-per cent reduction in overall tax rate.
The waiver is expected to boost demand in the property market, which has been a big challenge for real estate developers. It will also help existing owners by reducing their expenses. For new home buyers who opt for a 500 sq ft or smaller sized home will also benefit as EMI on such homes will be lower than homes of a larger size.
The decision might have some impact on infrastructure and overall development commitments, but it will drive a wave of confidence in the real estate market. Among the positive impact expected, slum rehabilitation projects and Studio Apartments/ 1 BHK flats would directly benefit from the decision, although the Municipal Corporation of Mumbai might face the challenge of dealing with a revenue shortfall.
With increased migration to urban centers, there is a shortage of housing units, this is being tackled through initiatives like PMAY and ‘Housing for All’. “In this scenario, the waiver is among different steps which will help create a positive mindset among home seekers when it comes to buying compact homes,” concluded Dr. Hiranandani.