The Maharashtra government has increased ready reckoner (RR) rates in the range of 10 per cent and 40 per cent in Mumbai and rest of the state. The rates, primarily used to calculate the market value of flats for the stamp duty and registration charges, will come into effect from January 1. They are expected to adversely hit the realty sector in Mumbai and rest of the state.
In case of Mumbai city area, the government has increased the construction cost to Rs 16,000 a square metre (sq mt) from the present Rs 13,000 a sq mt, a 23 per cent rise in the ready reckoner valuation factor guidelines for 2011.
On redevelopment of properties in the Mumbai city area, the Maharashtra Housing and Area Development Authority, better known as MHADA, charges the premium on the basis of RR rates. In view of this, when the land rates have increased in the Mumbai city area, the earnings of MHADA are going to increase sharply.
In Mumbai surburban areas, the construction cost has been increased from Rs 11,000 to Rs 15,000 per sq mt. “The government has increased the land rates substantially for evaluating the market value in the ready reckoner for 2011. According to the valuation factor guidelines, the rate of depreciation permissible on the old buildings is up to 70 per cent of the market value and if the market value arrived, after allowing the depreciation, is less than the developed land rate, the valuation has to be done according to the guideline relating to the costing pattern of land and construction,” state government sources told Business Standard.
In the Valuation Factor Guidelines of Ready Reckoner 2011, no new amendments have been made from the earlier guidelines, except an increase in the construction cost. Prior to 2005, the RR value was marginally increased every year. The government had increased the RR by 36-45 per cent in 2007, and due to the global recession in 2008-09, it nearly adopted the same RR value of 2007 for 2008 and 2009. In 2010, there was a marginal increase since the real estate market had not paced up at the end of 2009.
Sunil Mantri, president of the Maharashtra Chamber of Housing Industry, said: “The consumer will feel the biggest hit since he has to shell out more money for payment of stamp duty. This will be an additional burden on the consumer. Increase in the RR prices to such an extent is not justified.” He said the flats would become more expensive due to this.
Rajesh Mehta, director of Raha Realtors, said: “The implication is that the government has indirectly reduced depreciation slab and has increased the rates so that the buyer will not be able to get the benefit of the depreciation for which he is rightly entitled.”
| MUMBAI CITY RATES (IN RS PER SQ MT) | ||||||
| 2010 | 2011 | % Increase | ||||
| Residential | Office | Residential | Office | Residential | Office | |
| Malabar Hill | 379,400 | 474,200 | 531,200 | 663,900 | 40.01 | 40.00 |
| Sewree | 63,400 | 63,600 | 82,400 | 103,000 | 29.97 | 61.95 |
| Worli | 260,300 | 264,000 | 364,000 | 369,600 | 39.99 | 40.00 |
| Lower Parel | 94,900 | 100,100 | 132,900 | 140,100 | 40.04 | 39.96 |
| Dadar | 55,800 | 59,800 | 67,000 | 71,800 | 20.07 | 20.07 |
| Matunga | 71,200 | 96,400 | 99,700 | 135,000 | 40.03 | 40.04 |
| Sion | 124,000 | 161,200 | 193,200 | 193,200 | 30.00 | 30.01 |