The state government’s decision to raise land and house prices will upset middle-class dream home plans and reduce revenue collection through stamp duty, experts said.
The government increased on Sunday circle rates — second time in a year -- across the state in the range of 10-80% depending on the location.
A circle rate is the minimum value at which the sale of a plot, house, apartment or a commercial property can take place. Market price is the value of such an asset determined by supply and demand.
“The government’s decision to raise circle rates has jolted the common man. It’s unprecedented and uncalled for to increase the circle rates from 10% to 80% within one year when the government had the convention of revising these rates in three years’ time,” real estate lawyer Gaurav Sharma said on Monday.
Calling the hike in circle rates a violation of the fundamental right to live with dignity (provided for in Article 21 of the Constitution), Sharma said the decision might be challenged in a court.
“It (circle rate hike) will also have a negative impact on execution of sale deeds that have already been finalised. It will be now beyond the capacity of the common man to build his own house in Dehradun and other cities,” added Sharma.
The real impact will be visible after new zonal circle rates are released by districts but it’s certain that housing plans of middle classes will be thrown out of gear as circle rates of land will exceed market prices in several areas, according to experts.
Circle rates are defined by state’s revenue departments or local development authorities in line with what they perceive the prices at which property sale should be undertaken. Market rates are determined by the seller’s expectation of price and the buyer’s willingness to pay. Circle rates are generally lower than market prices.
“With this (circle rate) rise, mere clearance of building maps will require coughing up of more than Rs 1.5 lakh at several places. How can low-income or even middle classes afford that? The government will have to rethink its decision or there has to be some relaxation for low-income classes,” said GL Arora, an architect.
“The government can roll back its decision as this was done in the past as well,” he added.