Real estate planners in Chennai directed to levy fee for Amma Shelter fund

Real estate planners in Chennai directed to levy fee for Amma Shelter fund
08/09/2017 , by , in News/Views

The Chennai Metropolitan Development Authority (CMDA) has directed planners to levy a ‘shelter fee’ that works out to about Rs 25 per square foot for residential projects from all proposed developments over 3,000 square metres. The Amma Shelter Fund thus collected will finance affordable housing for low-income groups, and also help in reconstruction of existing slum-clearance tenements on government land.

According to media reports, the shelter fee would be 75 per cent of infrastructure and amenities charges (Rs 250 per sqm for residential projects and Rs 500 per sqm for commercial). Exemption will be given only to those projects where the size of each dwelling unit does not exceed 50 sqm (538 sqft), which is aimed at low-income families.

This is sure to push cost of residential structures by about Rs 25 per sqft — or Rs 25,000 for a 1,000 sqft apartment in a large complex —and Rs 50 per sqft for commercial structures, said Ajit Kumar Chordia, president of the Confederation of Real Estate Developers Association (CREDAI), Tamil Nadu.

Chordia stated that CREDAI is opposing the move, as it would make Tamil Nadu less competitive in terms of investments in realty, as compared with other states. “The fee has been slapped on commercial projects, IT projects and even institutional buildings,” he said.

The association is negotiating with the government for revising the shelter fee by extending the threshold limit beyond 3,000 sqm and slashing the levy from 75 per cent to 33 per cent of infrastructure and amenities charges.

Former national president of Builders’ Association of India R Radhakrishnan termed the levy of shelter fee ‘an atrocious move against the realty sector.’ “The real estate sector is in trouble already. Due to this levying of additional charges, the industry is going to suffer,” he said.  The State should make use of its own resources for setting up the fund, he added.

The fund was for building houses for river-side slum dwellers that are likely to be evicted soon. It will also be utilised to reconstruct Slum Clearance Board tenements utilising Central funds, said sources. As per norms, 10 per cent of the housing cost will be borne by beneficiaries, while the rest will be provided from the State government’s coffers.

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