A day after the state government steeply hiked property prices in major cities in spite of falling sales, realtors association has flayed the decision saying the move will harm the industry in particular and the state in general.
"I think the government has taken an upfront decision. There is no synchronisation in the decision-making. The decision should have been taken by the chief minister and the cabinet and not by the revenue department alone," Credai chairman Lalitkumar Jain told PTI today.
Also read: Checkout: How India's realty sector performed in 2013
The state yesterday increased the ready reckoner (RR) rates for residential and commercial properties in Mumbai, Pune, Thane and Navi Mumbai municipal areas to the tune of 5-30 percent with the average hike being 20 percent. The rates came into effect today.
Jain further said the decision will make people unhappy and will also harm the interest of the state's revenue generation as property sales are slumping already.
For the developers, their capital cost will go up which in turn will increase the sale price at a time when the inventory levels are piling up, Jain added.
Last year the state had increased the ready reckoner rate by 20 percent. Normally the RR rates are changed on the last day of the year.
Jain also called upon the government to reverse the decision or else its will harm the interest of the state. For the megapolis, according to officials, the rates were hiked by over 20 percent in only 26 of the total 737 zones of the city. The new rates mostly affect tony areas like Worli, Napeansea Road, Altamount Road, Carter Road and Prabhadvi, among others.
The ready reckoner rate is an annual statement of property rates based on which the stamps and registration department collects stamp duty from buyers. It is the basis for the calculation of the market value of flats for stamp duty and registration charges.
Following the hike, property buyers will have to shell out more in terms of higher VAT, service tax and stamp duty, leading to the overall price rise in the city which attracts the highest realty price in the country.
Duties from property registration and stamp duty are the largest revenue of the state and it has set a target of Rs 20,000 crore this fiscal from this. Meanwhile, the decision has sent the stock prices of the city-based realty companies jumped as much as 15 percent in lacklustre trade today.
While Godrej Properties rallied 14.55 per, Indiabulls Real Estate advanced 4.1 percent, HDIL rose 2 percent, Oberoi Realty gained 4.95 percent, Ajmera Realty rose 7.05 percent and DB Realty rose 0.5 percent higher on the BSE whose main gauge shed 30 points to close the first day of trade in the new year.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
