The Rajkot Municipal Corporation (RMC) decided to lower the price of its affordable houses for the middle-income group (MIG) category by 25% on Monday after failing to find buyers despite multiple advertisements over the last two years.
The civic body’s standing committee approved a proposal from the housing schemes department to reduce the price of a MIG flat from Rs 24 lakh to Rs 18 lakh at its meeting on Monday.
The scheme, which was launched in February 2020, included over 1,200 3BHK flats. These flats, with a carpet area of 60 square metres (sqm), were priced at Rs 24 lakh each.
RMC had first invited applications for these flats in February 2020 but elicited only 834 responses. Of the 834 applicants, only 230 were found valid; hence, only 230 flats could be allotted to eligible beneficiaries in August that year.
In January 2021, the RMC conducted another draw of lots and another 210 from the 834 applicants were allotted flats after they furnished the required documents. However, around 30 of the 440 beneficiaries surrendered their flats later on, civic officers said, because of financial constraints due to Covid-19 or after finding a flat in other government schemes. That left RMC with an inventory of 847 unsold MIG flats.
The civic body made a third attempt to sell these flats in April last year by inviting applications but got just 124 responses, despite thrice extending the deadline. Only 59 of them have actually accepted these flats.
RMC was able to allot 499 of the total 1,268 flats by holding three lotteries. However, only 293 of the 499 have accepted allotment and are making payments to the civic body, while the rest have surrendered their homes.
In all, 975 or almost 76 per cent of houses are unsold as of date, civic officers said.
Rajkot municipal commissioner Amit Arora said the price reduction was warranted by the low response at the price tag of Rs 24 lakh. “We couldn’t sell these flats despite making three attempts. These houses are getting old and we need to sell them. Therefore, we proposed that the price be brought down to Rs 18 lakh,” Arora said,
MIG flats are under construction in Viman Nagar Main Road near Prem Mandir, in Jai Bhim Nagar near Jaddu’s Food Field on Kalawad Road, near Sheetal Park on 150-feet Ring Road, and near Selenium Heights on Mavdi-Pal Road. Civic officers said the total cost of constructing these 1,268 dwelling units (DUs) is Rs 238.41 crore. All these flats will be ready to be handed over to beneficiaries by the end of May, said civic officers.
The municipal commissioner insisted that RMC doesn’t stand to incur losses by price reduction. “Depending upon the location, the construction cost of these DUs in MIG towers is in the range of Rs 13 lakh to Rs 15 lakh. So, we are not losing anything,” said Arora.
Standing committee chairman Pushkar Patel said the civic body needed to offload these flats. “These are affordable houses. If they remain unoccupied, they don’t serve any purpose and get old. Therefore, they have to be allotted to people even by reducing the price. The objective of constructing these flats was to provide houses to people under the housing for all initiative of the government. Generating revenue out of this scheme is not RMC’s objective,” said Patel.
“The price reduction will be applicable to flats that have already been allotted and we shall credit refunds into bank accounts of beneficiaries to maintain parity”, He added.
Incidentally, RMC has constructed more than 18,000 affordable houses under the Pradhan Mantri Awas Yojana (PMAY) and the Mukhya Mantri Gruh Yojana and allotted to beneficiaries. “It is for the first time that an RMC housing scheme didn’t find takers. Therefore, we had no option but to reduce the price,” said another civic officer.
Arora said the revised price was decided after considering various factors such as unit construction cost and some surveys.