PUNE: The overall rise in the ready reckoner (RR) rates for various parts of the city and suburban areas will add to the financial burden of prospective home buyers, real estate developers said.
The rates for different locations in the city for the 2014 have moved up by 10% or more depending on various factors largely related to the locality. “The rise in suburban areas of Pune is steeper than other parts. This seems to be in keeping with the saturation in most pockets in the main city and increasing construction activity in the suburbs,” said Sudhir Darode, president of Marathi Bandhkam Vyavasayik Association. “We will have to put up with the increased RR rates given the revenue constraints the state has been facing. But, higher rates will mean additional burden on home buyers who are already reeling under tremendous pressure from high real estate prices and various other taxes,” Darode said.
As it happens, a home buyer pays the stamp fee and registration charges directly to the state government through the registrar office. These are not pass-through payments and thus don’t reflect in the rate per square feet. Some home loan companies and banks do not consider these while granting loan.
Rohit Gera, vice president of developers’ body Credai Pune Metro, said the market witnessed customers from the affordable housing segment paying a high stamp duty last year, as their flat RR rates were higher than the flat price itself. “The luxury class on the other hand will not reflect the effect of the hike in the rates as they already pay a flat price which is above the RR rates,” he said, adding that the impact of higher rate will not be serious as people in this category buy homes anyway.
Kishor Wani Pate, also vice-president of Credai Pune Metro, however felt the hike in the RR will shoot up the property prices in the city, thus, affecting the buying capacity of the people.
Shashank Paranjape, managing director of Paranjape Schemes (Construction) Limited, said: “Construction industry across the country is already in the grip of slowdown. With increase in RR rate, buying an apartment is going to be more expensive and will also push negative sentiment among people.”
He further said that stamp duty rates are not realistic as even where the flats are sold below the ready reckoner rates, developers have to pay income tax. So, even if the builder wants to cut prices or at least not increase them, the increase in the RR rate will make it compulsory for a builder to pass on the hike to buyers. “This is a total lose-lose situation for buyer as they get high-priced apartments, builders suffer with less margins and government suffers dues to less revenue,” Paranjape said.
Vivek Shesh, chief executive officer of Sairung Developers, said, “Ready reckoner is a single, government authorized document, which is expected to reflect the current real estate market rates in a given area. It also serves as a base document for the government to levy stamp duty and registration of documents for property transactions. There still exists a considerable gap between the reckoner rates and the rates at which actual transaction takes place. Hence, the criticism is more of a knee-jerk reaction to the recent debacle of the industry than the real purpose of the reckoner that it is supposed to serve.”
“We had expected the rates to rise between 5% and 10%. However, given the present situation of the real estate market, I feel it would have been only fair not to raise RR as sales have been slowing down in the last 12-14 months and all other costs are rising,” said Amit Bhosale, executive director – ABIL Corp.