The new, revised Ready Reckoner (RR) rates in Maharashtra effective from on Tuesday, have been raised by 250 to 1,000 per cent in Mumbai’s western suburbs, especially the Borivli Zone’ stretching from Goregaon to Dahisar.
The market value of a flat with a built up area of 750 sq ft from the Borivli zone will now increase from Rs 1.35 crore currently to to Rs 1.80 crore.
Incidentally, the government has increased the construction cost in the suburban district from Rs 16,000 per sq mt to to Rs 17,600 per sq mt. In the city district, it has been hiked from Rs 17,500 per sq mt to Rs 19,200 per sq mt.
Realty players fear property buyers would have to shell out more as based on the revised RR rates and would also have to pay higher value added tax, service tax and 50 per cent increased stamp duty.
“The hike in RR rates will also adversely impact the re-development of old and dilapidated buildings from Mumbai’s western suburbs in particular. There won’t be sufficient buyers at this price. Besides, the government will quash its objective of providing affordable housing if it continues to raise RR rates,” a realty industry official who did not want to be identified told Business Standard.
However, Santhosh Kumar, CEO - Operations, Jones Lang LaSalle India said, “The increase in RR 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 per cent, 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 the cash component. “The revision in RR rates in my opinion should be done much more frequently instead of annually as is currently done 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.
However, the rise comes at a time when there has been practically no major transactions reported during entire last 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 per cent to 40.04 per cent.
But the government has reduced RR rates by 89.52 per cent for shops in Malvani in the north Mumbai from 20 per cent in 2012.
RR rates have also been decreased to 12 per cent to 12.01 per cent in south Mumbai for land, residential, office and shops.