With states like Maharashtra and Karnataka mulling a reduction in stamp duty and registration charges, the festive season - beginning with Ganesh Chaturthi - may get a very real shot in the arm. Both a one-time waiver for first-time homebuyers and an outright cut of stamp duty charges could be festive season gamechangers.
Such measures are not new. In previous unprecedented times of extreme market stress – such as post structural reforms like DeMo, RERA etc. - some state governments gave concessions to boost their sluggish real estate markets. For instance, in FY 2017-18, the Haryana government slashed circle rates by 3-8% (which are usually revised upwards every year) to push housing sales while Maharashtra kept their ready reckoner rates unchanged, instead of revising them upward, the same year to push demand.
Anuj Puri, Chairman – ANAROCK Property Consultants says, "Apart from the obvious homebuyer benefits, the government can generate badly-needed revenue via increased registrations after the most severe downturn in recent history. Affordable and mid-segment properties, which are in maximum demand, would see the most traction from such a move. "
"To ease inventory pile-up and cost overruns, many players have already topped off discounts with added incentives such as booking amount refunds, statutory fees waivers, cashback schemes, easy payment structuring and assorted freebies. A stamp duty rate cut could push sales into the green during the festive season."
The stamp duty rate, payable on the sale agreement, is fixed by the respective state governments and therefore varies:
Stamp duty rates in other major states largely hover anywhere between 5-8%, but they are lower in some states if property registration is executed in the name of a woman. Delhi, UP, Rajasthan, Punjab and Haryana offer relaxation in stamp duty for women buyers. The exemption on stamp duty ranges from 1-2% in different states:
* Indicative and may change. Stamp duty may vary city to city within a state
A property measuring 500 sq. ft. in a locality in Mumbai can cost as much INR 14,100/sq. ft. as a basic price. Parking charges can run up to INR 2.80 lakh, and floor rise charge to INR 45/sq. ft. (for a property on the 7th floor, the floor rise premium will be INR 315 per sq. ft. (45*7=315). The total base price will thus be INR 14,415/sq. ft.
If stamp duty charges are reduced by 2% to a new rate of 3%, a buyer immediately saves INR 1,49,750 /-. With a 3% reduction, the saving is nearly INR 2,24,625 /-. Such amounts matter in affordable and mid-segment properties.
Given that the residential industry revival will necessarily be a collaborative effort involving all stakeholders, there is anticipation that the government will provide this important nudge to what is traditionally the period of maximum traction for the housing sector.
Anuj Puri, Chairman of ANAROCK Group is a highly respected industry authority and thought leader with 30 years' experience in leveraging Indian and global real estate opportunities. His company ANAROCK has a staff complement of over 1800 qualified and experienced professional, with offices in all major markets in the country, dedicated services in Dubai and a global footprint with over 80,000 preferred channel partners.