Realty projects at a standstill in Hyderabad
A large number of workforce, both skilled and non-skilled, is also not getting jobs
Hyderabad: Construction activities have all but stopped in Hyderabad and HMDA limits. No major realty projects have been grounded in the last six months with the HMDA insisting on one-time payment of development charges and other taxes amounting to crores, to grant permissions.
With this, builders are not coming forward to take up new projects, resulting in the government losing revenues in the form of various charges and taxes besides affecting ancillary units supplying construction and other materials. A large number of workforce, both skilled and non-skilled, is also not getting jobs.
The state gets crores in the form of layout, building approvals, registration charges, sales tax, excise duty, service tax, siegniorage tax etc.
With no approvals, nearly 10 mega projects worth Rs 500 crore each are stuck, affecting the realty and construction sectors.
To encourage realty sector in HMDA limits, the Congress governments in undivided AP had introduced payment in installments after builders failed to pay development charges at one go.
In March 2015, the TS government also decided to adopt the same policy when then HMDA in-charge commissioner, Mr K. Pradeep Chandra, issued a circular to collect payments in installments at an interest of 18 per cent.
Builders were allowed to pay charges between Rs 15 lakh and Rs 75 lakh in four equal installments in one year.
For above Rs 75 lakh, eight instalments up to 24 months were allowed on the condition that the developer should mortgage an additional 5 per cent built-up area/land as an additional security.
They would have to issue post-dated cheques tow-ards instalments and submit an undertaking on a Rs 100 stamp paper for compliance with the above conditions.
However, the present HMDA commissioner, Ms Shalini Mishra, withdrew this in June.
An HMDA official said, “We found that some of the post-dated cheques paid by builders were bouncing; some were also selling the 5 per cent built-up area/land mortgaged with the HMDA.”
However, builders said it is not fair to make all builders suffer for the mistakes committed by some. “These days, people pay only when the project reaches an advance stage. With this, builders have to mobilise the entire investment. For building 200 flats of 1,000 sq. ft each, a builder has to pay Rs 1 crore development charges,” said Mr M. Vijay Sai, secretary general, TREDA.
Builders say 10 mega projects worth Rs 500 crore each are stuck for the last four months on account of approvals being stuck. They add that HMDA has to be adopt a “realistic policy” on this.
"If we build 100 villas, we have to pay nearly Rs 1 crore charges. To claim installment facility, 5 per cent, amounting to five villas, have to be mortgaged with the HMDA. These flats will be worth Rs 5 crore at Rs 1 crore each. Would any builder be willing to lose Rs 5 crore for the sake of Rs 1 crore development charges?" Mr Sai asked.
The association has submitted a representation to Chief Minister K. Chandrasekhar Rao, urging him to restore the installment policy to give a fillip to the realty sector in Telangana that had started picking up only recently after a slowdown for over five years due to political uncertainty over the statehood issue.