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Friday, December 15, 2017

CREDAI opposes Shelter Fee as govt looks at alternate mechanism to fund affordable homes

Shelter Fee, a levy to raise funds for affordable homes for poor, has run into trouble with six developers owing allegiance to Confederation of Real Estate Developers Association of India (CREDAI) getting a stay from the Madras High Court on collection of additional cess as the government is looking at alternate options to finance the scheme.

CREDAI, Chennai, president Suresh Krishn told Express that the real estate body has urged the government to scrap the levy as it would add pressure on the real estate sector.

The shelter fee levy of 75 per cent of the prevailing Infrastructure and Amenities rates from all the proposed developments having a FSI of 3,000 square metres has increased the cost of residential projects by Rs 25 per square feet and commercial projects by Rs 50 per square feet.

The levy is part of shelter fund created by the state government in July 21 to fund the ambitious housing project for affordable homes for poor. The move was to do away with the regulation of providing 10pc of built up area in projects developed in piece of land exceeding 10,000 square metres for economic weaker sections and implementing the shelter fee.

As more and more developers are approaching the Madras High Court to get a stay order on levy of the cess, it is learnt officials are working on other options to ensure the fund keeps flowing.
Till now a total of 49 approvals, which include 28 multi-storied buildings and 21 special buildings, have been given by Chennai Metropolitan Development Authority since the levy was was implemented from July 21. The total demand raised include Rs 80.64 crore while the amount of shelter fee collected has been only Rs 20.27 crore.  

Official sources said that the government is looking at two options. This include levying a shelter fee at guideline value (GLV) for an area equivalent to 0.5pc of Floor Space Index (FSI) area for all proposed developments having a FSI area of 3,000 square metre and above except for residential units where the size of dwelling units (carpet area) does not exceed 60 square metre.

The other aspect is to levy 0.5 per cent of FSI area for all proposed developments where in the development proposed does not exceed 2,000 square metres.

However, CREDAI says its too early to comment on the proposals. “We just want the shelter fee to be scrapped,” says Krishn.
Why Shelter Fee:
1. Shelter fee was considered by the state government to help fund the affordable homes for economic weaker section.
2. It was levied as there has been a huge demand supply gap in providing home for the poor.
3. Currently, there is a demand for 12 lakh jomes and the slum clearance board could supply only 1.5 lakh housing units for the poor
4. The state government wanted to do away with the regulation of providing 10pc of built up area in projects for economic weaker section as it was being misused by developers
5. Currently, a total of Rs 20 crore funds has been generated through shelter fee

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