Devil is in details. The revised ready recknor (RR) rates, which are effective from today onwards, ranges from a record 225% to 1,000% in Borivli zone comprising Goregaon to Dahisar suburbs in Mumbai. The market value of a flat with built up area of 750 sq ft from Borivli region would increase to Rs 1.80 crore from the present level of Rs 1.35 crore. However, the rise comes at a time when there has been practically no major transactions reported during the last one year from this region. Besides, RR rates for shops come to Rs 10,69,000 per sq mt in Malad east compared to last year’s Rs 82,200 per sq mt.
Further, the stamps and registration department has created a new zone in the Borivli region where the RR rates are hiked in the range of 39.95% to 40.04%. Realty players fear the property buyers would have to shell out more due to revised RR rates, they would also have to pay higher value added tax, service tax and 50% increased stamp duty.
Incidentally, the government has increased construction cost to Rs 17,600 per sq mt from Rs 16,000 per sq mt in Mumbai suburbs while it hiked to Rs 19,200 per sq mt from Rs 17,500 per sq mt in Mumbai city.
But the government has reduced RR rates by 89.52% for shops in Malvani in the north Mumbai from 20% in 2012. RR rates have also been decreased to 12% to 12.01% in south Mumbai for land, residential, office and shops.
Realty industry official, who did not want to be identified, told Business Standard, “Hike in RR rates will also adversely impact the redevelopment of old and dilapidated buildings from Mumbai’s western suburbs in particular. There won’t be sufficient buyers at this price. Besides, government will quash its objective of providing affordable housing if it continues to rise RR rates,” he said.
However, Santhosh Kumar, CEO - Operations, Jones Lang LaSalle India said: “The increase in ready reckoner rates raises the base value of residential properties, thereby enabling the government to charge proportionately higher for stamp duty and registration. It will also reduce the incidence of black money circulation on the property market. At the same time, end users will be impacted by the additional expense. The ready reckoner rates have moved up from anywhere between 10-20%, depending on the location. However, they still do not reflect market reality since they are still below the current market rates in most areas. The problem is that if the market corrects, the ready reckoner rates might not reflect the market realities because they do not move in tandem with market nuances.”
Samantak Das, director, research and advisory, Knight Frank said, RR rates should reflect the market transaction rates and thereby bring in transparency and reduce cash component. “The revision in RR rates in my opinion should be revised in much more frequent manner instead of currently done annually so that it can reflect market transaction rates. I do not think the hike in RR rates will in any way affect the market sentiments,” he noted.
