Builders seek changes in rent rules amid damp property market

They want to rent out their unsold flats as 'service apartments' for a short time, to earn money during the current slowdown

Struggling to sell their luxury apartments due to poor demand, builders have now approached the Maharashtra government, seeking changes in the Leave and Licence Agreement rules in a desperate bid to clear inventories.

They are now seeking to rent out their unsold flats as 'service apartments' to those intending to take homes on rent for a short span of time, to earn some money during the current slowdown in real estate market, a state Housing department official told PTI.

However, no formal proposal has come from the builders in this regard. But, if they come up with some concrete proposal, the Housing department may consider it, he said.

"It is very difficult for a middle-income group person to buy a flat in Mumbai. There are currently five lakh luxury homes unsold in the city. When these flats are not sold, builders are unable to repay banks and other financiers their loan amount," the official said. "To get some respite, builders have approached us saying they want to rent out their flats as service apartments for which they want the Leave and Licence Agreement tweaked," the official said.

The prices of unsold homes in Mumbai run into crores of rupees, forcing people to opt for homes in neighbouring areas like Thane, Navi-Mumbai and Vasai-Virar, he said.

"Thus the builders have come up with a new way to make some money now and repay their debts. For instance, if the cost of an apartment is Rs 2 crore, they will give it on a monthly rent of Rs 30,000. The builder will start a full-fledged service provider agency for these apartments where all the needs of the person, who has taken the flat on rent, will be taken care of by the builder," the official said.

Services like requisite furniture, cleanliness, maintenance of the apartments, water and parking facilities will be provided by the builder to the residents, he said.

"The builders have come to us with their request. The rents from these apartments will reduce their financial burden considerably. At the same time, it will be a new option for those who want apartments for a short period of time, but do not want to pay exorbitant prices in 5-star hotels," the official said.