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Homes in Mumbai to get costlier as ready reckoner rates increased
State revenue minister Chandrakant Patil told the legislative Assembly the new rates came into force from April 1
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Buying a home in Mumbai got even more costlier as the Maharashtra government on Saturday hiked ready reckoner rates by 3.95% on an average from April 1.
While this is the lowest hike in in seven years, it has caused resentment among builders and analysts who said the move could hurt the realty sector that is already battling a massive slowdown. The ready reckoner is a rate card published annually. It indicates the value of a property. Any hike would mean an increase in stamp duty rates the home-buyer pays while buying or leasing properties. All real estate calculations are based on the RR, whether it is stamp duty, registration, premiums or tax collection. The rate is determined by the registration and stamp duty department, based on sales data, surveys, visits to property exhibitions and major transactions of the year.
On Saturday, the state announced new ready reckoner rates for all cities. State revenue minister Chandrakant Patil told the legislative Assembly the new rates came into force from April 1. In Thane, RR rates were increased by 3.18%. Ahmednagar saw the highest increase — 9.82% on an average; Nagpur — the chief minister’s hometown — saw the lowest hike, at 1.50%.
The modest increase in the ready reckoner rate in Mumbai compared to the past seven years might indicate the demonetisation effect, analysts said.
In 2010, RR was increased by 13%; in 2011 by 27%, 2012 by 17%, 2013 by 12%, 2014 by 13%, 2015 by 15% and in 2016-17, it was hiked by 7%.
For the RR, the city is divided into 750 units. Even premiums charged on Floor Space Index (FSI) and other property-related payments are determined by the RR. The premium on FSI is in the range of 60-100% of the RR and the actual sale price of a flat can also get hiked by 20-30%.
Developers and analysts said the hike was not in sync with the market price and could further dampen buyer sentiment.
Babulal Varma, managing director, Omkar realtors and developers said, “For the past two years, real estate prices have not increased, but ready reckoner rates are going up constantly. This will ultimately hurt home-buyers. In addition, in the long term, it will affect builders as the entire cost of the project will increase drastically.”
Samantak Das, chief economist, Knight Frank, said, “At a time interest rates on home loans are going down and builders are offering sops to buyers, such a move will act as hurdle.” Das said the state had taken the step just when buyers were coming back and sales were gradually taking place.
