Hike in circle rates will hit sales, say realtors

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Published on Jan 04, 2020 09:29 PM IST
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Gurugram The proposal to increase circle rates is being opposed by developers, plot owners and residents of the city as they fear this move will increase the price of the property on account of the increased stamp duty that has to be paid to the government for each deal. A delegation of plot owners and developers on Saturday met two city MLAs and submitted a memorandum to them against the proposed hike.

Members of the delegation told Sudhir Singla, MLA, Gurgaon, and Rakesh Daultabad MLA, Badshahpur, that the increase in circle rates proposed by the district administration will badly hit the real estate market, which is already facing a slowdown.

“The proposed hike for private colonies and floors is almost double the present rate. It will increase the circle price more than the market rate and badly hit sales. Both the MLAs gave us a patient hearing and assured help,” said Ramesh Singla, who is also the president of home developers and plot owners’ association.

Last week, the Gurugram administration had proposed a hike in circle rates in the city that, if implemented, could mean a steep increase in stamp duty, particularly for builder floors and premium properties in areas adjacent to Golf Course Road, MG Road, Sohna Road and Delhi-Gurgaon Expressway. The proposal has not gone down well with stakeholders as they fear it will further lead to erosion of sales, as more tax will have to be paid by the buyers.

Officials of real estate consultancy firm, Anarock, said that the proposal to almost double the circle rates in few micro markets would further dampen end-user and investor sentiment, as both demand and liquidity in the market is already tepid. The firm also cited that the city had the highest unsold stock in the entire NCR and it would hit the realtors badly.

Nayan Raheja, executive director, Raheja Group, said that under the present condition, where sales and prices are subdued, the proposal to hike circle rates is out of sync with the market dynamics. “Under present conditions, there is a case for reducing the circle rate. We urge the administration to revisit the proposed hike,” he said.

Real estate experts also said that decision to revise the circle rates twice a year was to ensure that there was not much difference between these rates and the market price. “The negative impact of this move could be that buyers will become more interested in investing in other markets in NCR, such as Noida and Greater Noida. This move might help in individual transactions, but won’t generate much revenue for the state,” said Sanjay Sharma, a city-based consultant.

The government, meanwhile, has asked the stakeholders to submit objections to the proposal by January 10.

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