The Haryana government has approved a significant increase in the External Development Charges (EDC) for various real estate sectors in the state. This decision, effective from January 1, 2025, is expected to lead to a rise in property prices across Haryana.
Details of the Decision
The cabinet has sanctioned a 20% increase in EDC until 2025, followed by an annual increment of 10% starting in 2026. This move aims to enhance funding for infrastructure projects within the state, including roads, sewage systems, and other essential services that support real estate development.
What Are External Development Charges?
External Development Charges are fees collected from real estate developers for the construction of external infrastructure such as roads, drainage systems, electricity supply, and water lines. These charges are calculated by the Department of Town and Country Planning (DTCP) based on the potential growth of specific housing, commercial, or mixed-use areas. The last revision of these rates occurred in 2015.
Impact on Property Buyers
The increase in EDC is likely to place a financial burden on property buyers and developers. Parveen Jain, President of NAREDCO (National Real Estate Development Council) Haryana, expressed concerns that the 10% annual increase could lead to a significant financial strain on both developers and end-users. He noted that high EDC rates had previously halted new licenses for developers around 2015-2016 due to excessive costs.
Potential Market Repercussions
Real estate experts warn that the rise in EDC rates could negatively impact the already strained real estate market in Haryana, particularly in Gurugram. Vinod Behl, a Gurugram-based real estate analyst, indicated that with existing high property prices and interest rates, the market could face a downturn in 2025.
Historical Context
For eight years prior to this decision, EDC rates had not increased. The current charges represent about 7-8% of the total project cost for developments in Gurugram. The state government had previously sought assistance from IIT Delhi and IIT Roorkee to determine appropriate EDC rates but faced challenges in establishing new benchmarks.
Future Developments
In addition to the EDC increase, the Haryana cabinet has approved the appointment of a consultant to establish future indexing rates for these charges. This step is aimed at ensuring that EDC rates remain aligned with market conditions and inflationary trends.
Disclaimer: The information provided in this article reflects recent decisions made by the Haryana government as of December 30, 2024. For ongoing updates and detailed analysis regarding property regulations and market conditions, please consult reliable news sources or real estate experts.
