With the reduction in stamp duty by the state government, fence-sitters can finally take the jump and go in for buying their dream home
In a bid to promote affordable housing in Maharashtra,the state government has proposed a reduction in the stamp duties and registration fee charged on residential properties for all houses measuring below 750 sq feet in size. Players in the real estate sector inform that this move would bring the demand back into the market.
At present, for any property purchase, the buyer needs to shell out around five per cent as stamp duty charges, calculated on the ready reckoner rates or the rates determined by the government on particular localities in the city. The state government has also planned to calculate the stamp duty as per the market rates soon. As per the new proposal, the stamp duty rates will be reduced to one per cent levy for houses for Economically Weaker Section (EWS), two per cent for Low Income Group (LIG) houses, and three per cent for Middle Income Group (MIG) houses. For a property above 750 sq ft, high income individuals would continue to pay the stamp duty at the prevailing five per cent. Lalit Kumar Jain, former chairman of Confederation of Real Estate Developers’ Associations of India (CREDAI) and CMD of Kumar Urban Limited (KUL), explains, “Even a two-four per cent reduction in the stamp duty adds up to a big number. Many potential property buyers who are waiting for some positive news, would certainly want to take this as an incentive to buy their first house.“ The state government should have however, reduced the rates to just one per cent for all the three categories, as that would have boosted the income of the state government further. “At present, the transactions are low; if the state government reduces the stamp duty charges further for MIG flats, more people would come forward to buy houses and there would be a spurt in the stamp duty collected. Most of the transactions that happen today, are in the MIG segment,“ Jain explains. Krishnan Muthukumar, co founder and director, Tridhaatu Developers, explains that this is the first time that the state government has thought of reducing any kind of charges taking a positive step towards affordable housing. “We only get to hear of cases where the ready reckoner rates are hiked every year by 15 -20 per cent. By reducing the stamp duty charges, people who are waiting on the sidelines would surely be prompted to take interest.“
Muthukumar explains that a two four per cent drop in the stamp duty would translate in savings worth at least a couple of lakhs of rupees. “Also, the registration charges would be reduced. There are several places in the city where the ready reckoner rates have over-taken the market rate. So, by calculating the stamp duty to the market rate, further savings are possible,“ he adds. The policy also proposes that the stamp duty will be calculated for these segments on the basis of the market value at which the transaction is concluded as mentioned in the agreement. The state government’s draft housing policy, that has proposed these changes, has defined EWS houses as residences spread over up to 269 sq ft, LIG houses spread over 270 to 538 sq ft, MIG houses as 539 to 753 sq ft, while any house spread over more than this area is defined as HIG. The state government also proposes to lower the registration charges for these houses at Rs 1,000 per transaction against the current charge of Rs 30,000.
CONSTRUCTION OF SMALLER HOUSES
Pankaj Kapoor, managing director of Liases Foras, a real estate research and rating agency, explains the move by the state government would now push for the construction of smaller flats. “If you calculate all the costs like the stamp duty, the registration and the service taxes, it adds up to around 10-11 per cent of the total value of the property. If anyone is saving that kind of money with the government’s policy, he would certainly want to make a purchase now,“ Kapoor informs. With lesser demand for larger flats, the developer would want to construct smaller flats, which would ensure faster sales.
Courtesy Times OF India