Market values for properties across Maharashtra soared by an average seven per cent after the state government Thursday hiked the Ready Reckoner (RR) rates amid the downturn witnessed in the construction industry. The revised rates will be applicable from Friday onwards.
Revenue Minister Eknath Khadse justified the hike terming it as “moderate” as compared to the increases in corresponding rates in the last six years.
The RR rates are market values of a property determined by the government for payment of stamp duty in the course of property transactions.
Collections from stamps and registrations form the second largest sources of revenue for the Maharashtra government, which has targeted an income of Rs 23,458 crore from the head in 2016-17.
But the revision in rates will hit home buyers and also impact the construction cost for developing properties.
Home buyers have to pay stamp duty equivalent to 5 per cent of the RR value or 5 per cent of the actual property value as mentioned in the sale agreement, whichever is more. Property tax computations are also linked to RR rates.
The input cost for construction activity would be impacted as several charges collected by civic corporations are linked to the RR rates. Officials confirmed that the home buyers investing in redevelopment projects would be the worst hit.
The Indian Express had earlier reported the government’s plan to go for a moderate hike amid a demand from legislators of ruling alliance and the construction industry against hiking rates on account of the slowdown. The government had earlier postponed the revision in rates from January 1 to April 1.
In Mumbai, the country’s most expensive real estate market, value for 22 per cent of the city area was higher than the average hike with a 10-20 per cent increase as compared to prevalent values.
In fact, sources confirmed that there are some development pockets where the market values increased by over 20 per cent.
“The moderate hike was passed on considering the drought crisis faced by the state and taking into account actual property transactions recorded in 2015,” Khadse said.
Outside Mumbai, Khadse said that the average hike was around eight per cent for properties in rural areas, 7 per cent in peri-urban areas, and 5 per cent in areas falling under other municipal corporations.
As reported earlier in The Indian Express, Khadse confirmed that the government had tried to arrest the growth in values in commercial belts across Mumbai.
“The demand for commercial properties has been on the decline. This is due to several factors including high land rates and rise of online business platforms,” a senior official had earlier told this newspaper. The Indian Express had earlier reported that in 2015 commercial belts such as Colaba, Bhuleshwar, P D’Mello Road, SV Road (Bandra), Chakala and Kurla had witnessed property transactions at rates which were even lower than the prevalent RR rates.
The revised rates also indicated that there had been a steady shift of housing and office stock in the eastern suburbs of Mumbai, which are traditionally seen as poorer cousins of the tony island city and the western suburbs.
Property values in the eastern suburbs have appreciated the most in the revised rates. Development pockets in the island city witnessed the lowest hikes.
“The data indicates the movement of people within the city in search of affordable homes and office spaces,” a senior government official.
Sources said that the availability of large contiguous land parcels in the eastern suburbs, cheaper property values, and improved supporting infrastructure were the major factors that shaped this trend.
Certain development pockets in Mumbai were merged with adjoining pockets for avoiding a steep hike.
Gifting property to family members gets cheaper
Gifting a property to a family member or heir just got cheaper with the government waiving off registration fee on instruments pertaining to transfer of immovable property by an owner to any of his blood relatives. Maharashtra’s Revenue Minister Eknath Khadse announced the move in the legislative assembly. The government had already reduced the stamp duty for such transactions to a nominal amount last year. ENS