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Mumbai: Throwing a wet blanket on the soaring holiday spirits and the hopes of many Mumbaikars, the Maharashtra government has increased the ready reckoner rates (RR) for real estate by an average of 25-30%.
The ready reckoner is mostly used to work out the market value of flats for the purpose of calculating stamp duty and registration charges. While the average hike is 25-30%, the RR rate for some prime areas in Worli, Dadar, Chembur, Parel, Ghatkopar, Kanjurmarg, Andheri, JVPD have been increased by 30% to 40%.
Realty experts say the new rates, effective from January 1, may not affect the sales of new flats which, in any case, exceed the ready reckoner by 50% to 100%. But the rates will hurt the sale and purchase of old flats because of the 36% rise in the cost of construction under the new calculus.
Rajesh Mehta, director of Raha Realtors, said the increase in the construction cost "from Rs 1,022 per sq ft to Rs 1,395 per sq ft" would deal a major blow to redevelopment schemes. New rates based on built-up area
In these projects, the developers will now base their profitability on the amount they have to spend on the construction," he said. Also, Mehta said, "In cases of resale of old apartments, the RR value will be marginally higher than the agreement value. Due to this, the burden of the additional stamp duty will have to be borne by the buyer of the old flat. Besides, there will be an impact on the capital gains tax calculations under section 50 (c) of the Income Tax Act for the developer." The RR rate was increased nominally every year until 2005. Things began to really change in 2007 when the state hiked the calculus by 36-45%. The rates remained there till 2009. This year, however, the government decided to make a major change after witnessing the real estate market's astronomical growth. This year, the government, incidentally, has based its new RR calculus on built-up area, a deviation from its earlier diktat to base transactions on carpet area. Furthermore, it has raised the land cost of Finlay Mills, the defunct National Textile Corporation mill, from Rs 3,100 per sq ft to Rs 8,000 per sq ft—a 155% hike. Two years ago, Lodha Group had quoted Rs 750 crore for the 10.3-acre land. The mill is currently caught in a battle between Lodha Group and Indiabulls, which has offered to pay Rs 1,000 crore for the land.
The ready reckoner is mostly used to work out the market value of flats for the purpose of calculating stamp duty and registration charges. While the average hike is 25-30%, the RR rate for some prime areas in Worli, Dadar, Chembur, Parel, Ghatkopar, Kanjurmarg, Andheri, JVPD have been increased by 30% to 40%.
Realty experts say the new rates, effective from January 1, may not affect the sales of new flats which, in any case, exceed the ready reckoner by 50% to 100%. But the rates will hurt the sale and purchase of old flats because of the 36% rise in the cost of construction under the new calculus.
Rajesh Mehta, director of Raha Realtors, said the increase in the construction cost "from Rs 1,022 per sq ft to Rs 1,395 per sq ft" would deal a major blow to redevelopment schemes. New rates based on built-up area
In these projects, the developers will now base their profitability on the amount they have to spend on the construction," he said. Also, Mehta said, "In cases of resale of old apartments, the RR value will be marginally higher than the agreement value. Due to this, the burden of the additional stamp duty will have to be borne by the buyer of the old flat. Besides, there will be an impact on the capital gains tax calculations under section 50 (c) of the Income Tax Act for the developer." The RR rate was increased nominally every year until 2005. Things began to really change in 2007 when the state hiked the calculus by 36-45%. The rates remained there till 2009. This year, however, the government decided to make a major change after witnessing the real estate market's astronomical growth. This year, the government, incidentally, has based its new RR calculus on built-up area, a deviation from its earlier diktat to base transactions on carpet area. Furthermore, it has raised the land cost of Finlay Mills, the defunct National Textile Corporation mill, from Rs 3,100 per sq ft to Rs 8,000 per sq ft—a 155% hike. Two years ago, Lodha Group had quoted Rs 750 crore for the 10.3-acre land. The mill is currently caught in a battle between Lodha Group and Indiabulls, which has offered to pay Rs 1,000 crore for the land.
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