The increase in ready reckoner rates by 10-40 per cent in Maharashtra will impact sale of housing properties as this would increase stamp duty for both primary and secondary sales. The Mumbai housing market had started showing signs of revival in last six months after an 18-month period of sluggishness beginning the fourth quarter of 2010. The raised ready reckoner rates could dampen that revival, given that home buyers are already burdened with service tax, sales tax, VAT, taxes and duties on construction materials, and so on, says Ramesh Nair, managing director (west), Jones Lang LaSalle India.
The ready reckoner rate is primarily used to calculate the market value of flats for stamp duty and registration charges. In case of Mumbai, the government has increased the construction cost to Rs 16,000 a square metre (sq mt) from Rs 13,000 a sq mt, up 23 per cent in the ready reckoner valuation factor guidelines for 2011.
Land owners will now cite the increased the ready reckoner value to demand higher prices for their plots. This will negatively affect land sales, as there is already a pronounced lack of liquidity in the sector. Developers will also feel the heat due to the higher capital gains tax they would have to pay.
In many locations, it has been noticed that the ready reckoner rates are not in line with market rates. In 2008-09, the government had provided relief to home buyers and developers by not increasing the Ready Reckoner rates. Given the current uncertainties in the real estate market, the government should definitely reconsider its stand on this issue, says Nair.