Scrap Shelter Fee, says CREDAI

CHENNAI: Shelter Fee, a levy to raise funds for affordable homes for poor, has run into trouble with six developers affiliated 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 alternative 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 sector.

The shelter fee levy of 75 per cent of the prevailing Infrastructure and Amenities rates from all proposed developments having an FSI of 3,000 sqm has increased the cost of residential projects by `25 per sqft and commercial projects by `50 per sqft.

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 the poor. The move was to do away with the regulation of providing 10 per cent of built up area in projects developed in a piece of land exceeding 10,000 sqm 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 came into force from July 21.
The total demand raised include `80.64 crore while the amount of shelter fee collected is `20.27 crore.

Official sources said that the government is looking at two alternatives. The government is considering levy of shelter fee based on guideline value (GLV) instead of Infrastructure and amenities charges.

The shelter fee will be levied on guideline value for an area equivalent to 0.5pc of Floor Space Index (FSI) for all proposed developments having an FSI area of 3,000 sqm. In the other aspect, the government is planning to have the parameters but the development proposed should not exceed 2,000 sqm.

However, CREDAI says it is too early to comment on the proposals. “We just want the shelter fee to be scrapped,” says Krishn.