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The Gujarat government has announced concessions for the real estate industry in conjunction with the revised jantri rates that came into effect earlier this month. The state government reduced chargeable FSI and premium for converting agricultural land to non-agricultural land. The concessions offered by the state government will mean that residential affordable housing (RAH) units will not see a hike in prices, but prices of houses of other categories - R1, R2 TO and Tall Buildings will increase substantially.
According to real estate industry estimates, prices of housing units in all categories other than RAH units are expected to rise by about 20% after the new jantri rates take effect. The state government clarified that all building plans submitted to respective authorities before the new jantri regime comes into force will attract both the old jantri as well as old chargeable FSI rules.
Paid FSI has been cut by 50% in all three categories of RAH units. For other residential units - those under R1, R2 and TOZ (transit-oriented zones) - the chargeable FSI has been slashed from 40% to 30% of the jantri rate. For tall buildings, the chargeable FSI for builders has been slashed from 50% of the jantri rate to 40% of the jantri rate. The chargeable premium for converting land from agriculture to agriculture has been slashed from 25% of the jantri rate to 20% of the jantri rate. For converting agricultural land to non-agricultural land, the premium has been slashed from 40% to 30% of the jantri rate.
The revision of jantri rates was the first significant decision of the Bhupendra Patel 2.0 government, as the state government doubled jantri rates after over a decade. The government had initially announced that revised jantri rates would come into effect from February 5 this year, but after facing backlash from several quarters, deferred implementing the new jantri regime to April 15.
The state government has clarified that the new jantri rates will not impact the units where construction work has already begun. However, the new rates will affect projects that have not yet started construction work, and the revised jantri rates will be applicable from the date on which building permission is granted.
The Gujarat Chamber of Commerce and Industry raised concern that the increase in jantri rates will further increase the financial burden on the real estate industry, making it difficult to revive the sector in the post-pandemic scenario. However, the government has argued that the increase in jantri rates is necessary to keep pace with the rising costs of construction materials and the infrastructure needed to support real estate development.
In conclusion, the concessions announced by the Gujarat government are aimed at providing some relief to the real estate industry. While the reduced FSI and premium for converting agricultural land to non-agricultural land will benefit developers, it remains to be seen how the increased jantri rates will impact the affordability of housing for the public. With the real estate industry facing challenges in the post-pandemic scenario, the government needs to strike a balance between promoting growth and ensuring affordability.
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