One year of Covid: Why stamp duty reduction may have single-handedly rescued real estate sector
PUNE The real estate sector in Pune was one of the worst- affected due to the Covid 19 pandemic, as projects halted after migrant workers left the city. Buyers, too, lost their purchasing power. The real estate sector, which provides employment to a large population, came to a complete standstill.
However, the decision by the Maharashtra government to reduce stamp duty by three per cent revived the sector. This decision helped ready flats in the city sell, and put money in the hands of developers to start the new projects in Pune.
While property registration numbers went up betwween October and December 2020, due to the stamp duty reduction, it did not add to the government coffers as revenue generation from stamp duty reduced.
According to the statistics shared by the Inspector General of Registration’s (IGR) office, between September and December 2020, 11,94,013 document registrations were reported.
A revenue of Rs11,702 crore was reported for the January to December period.
This was against 8,44,963 document registrations bringing in Rs28,989 crore to the government exchequer in the Jan-Dec period of 2019.
The centre imposed thee lockdown in March, as a result of which migrants workers were left stranded. By April and May, large chunk of workers left the city.
As labour left the city, major infrastructure work like roads, water supply, and metro all got affected. In the absence of workers, municipal corporations were not able to carry out development works, even though they were allowed to, during lockdown.
When the government allowed construction activity to resume, the first problem was labour.
Without workers no construction activity was able to resume.
Satish Magar, national president of the Confederation of Real Estate Developers Association of India (Credai) said, “Real estate sector was one of the worst affected. Investment was blocked and there was no respite seen. Government’s single decision on stamp duty changed the scenario and buyers also gave a huge response and purchased all the ready homes.”
According to Magar, the real estate sector expects more demand from buyers in the coming days as the “work from home concept” will probably have citizens preferring to own their own homes.
Prashant Waghware, city engineer, Pune Municipal Corporation said, “PMC got badly affected due to the lockdown as the revenue from building permission came down drastically. It was almost half as compared to previous year as no developer was willing to submit their files for new projects. Maharashtra government have a concession on stamp duty and people started purchasing homes. It helped to move the economy. Even the decision on introducing Unified Development Control Rules helped a lot as many developers are planning to launch new projects. All this will help to bring in more revenue for the building permission department.”
Suhas Merchant, Credai Pune president said, “During lockdown, the real estate business came to a complete standstill, as labour went back to their hometowns. We took various initiatives for the welfare of labourers. Labour camps were made aware about the Covid-19 guidelines. Even financial institutes brought down the home-loan rates.”
One of the builders, on condition of anonymity, said, “If the lockdown continued for a few months, almost all the small builders would have gone bankrupt. The state government’s 3 per cent stamp duty waiver, changedd the sector entirely. From villas to affordable housing all sold out. Now builders have enough money to start new projects. Even as the sector improved speedily, there is no chance of real estate prices dropping, as the builders’ capacity to hold inventory has increased again.”
Stamp duty registration (in rupees)
Month / 2019/ 2020
January/ 2,35,066/ 2,12,354
February/ 2,71,180/ 2,69,508
March/ 3,14,372/2, 14,195
April / 2,28,848/ 1,139
May/ 2,66223/ 42,573
June/ 3,20,183/ 1,53,155
July/ 2,58,632/ 1,65,139
August/ 2,21176/ 1,83,515
October/ 1,93995/ 2,47,601
November/ 2,20,808/ 2,74,773
December/ 2,39,292/ 3,97,396