Taking a cue from the Maharashtra and Madhya Pradesh’s governments’ decision to reduce stamp duty rates on account of the COVID-19 pandemic, Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has recommended the state government to reduce stamp duty on registration of properties by 2 percent to boost demand in the state.
It has recommended that the reduction be valid until August 31, 2021, officials from the agency said.
It has also proposed that the registration fee levied for agreement to sale documents should be capped at Rs 2,000. This is currently at 25 percent of the stamp duty.
“The UP-RERA authority has sent its recommendations to the state government last week. We have proposed that the state government may consider reducing stamp duty by two percentage points so that more registries can be done,” said Rajive Kumar, chairman, UP-RERA, adding the proposal is for a single rate cut.
The stamp duty in the state currently ranges from 5 percent to 7 percent of the property value.
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Real estate developers said that reduction in stamp duty is much needed considering that demand has been hit following the pandemic.
"Uttar Pradesh is the largest real estate market in India with a population equivalent to Brazil. If stamp duty is reduced, it can help reverse the otherwise sluggish demand," said Ankit Kansal, managing director of firm 360 Realtors.
"If this recommendation is implemented it would prove to be a win-win for all stakeholders. Not only will it help bring more fence sitters into the market, it will also help offload unsold inventory," said Amit Modi, director ABA CORP and president (elect), CREDAI, Western Uttar Pradesh.
"UP-RERA's proposal, if accepted, will bode well for the property markets of Noida and Greater Noida. It will make these places an attractive destination for buyers, especially considering the fact that Jewar Airport is coming up in the vicinity," said Mani Rangarajan, group chief operating officer (COO), Housing.com.
Abhishek Kumar, president of Noida Extension Flat Owners Welfare Association (NEFOWA), said that if the recommendation is implemented, it will go a long way in reducing registration costs and benefit homebuyers in the long run.
To boost the stagnant real estate market hit by COVID-19, the Maharashtra government on August 26 decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020. Stamp duty from Jan 1, 2021, until March 31, 2021, will be 3 percent.
Real estate developers had been asking for a reduction in stamp duty following the lockdown to encourage homebuyers to purchase properties during the pandemic.
Madhya Pradesh government on September 7 also announced that it was reducing stamp duty by 2 percent in municipal areas to boost the stagnant real estate market hit by COVID-19. The reduction is valid until December 31.
Housing and Urban Affairs Secretary Durga Shanker Mishra had said on August 28 that the Maharashtra government’s decision to reduce stamp duty on registration of properties is a "good step" and will have a "positive impact" on price reduction.
"We had given suggestions to all the states to reduce it. The Maharashtra government has done it. We will pursue with others (states). It's a good step by the Maharashtra government. It will have a positive impact on cost reduction," he had said.