Buying and developing properties in Mumbai, the most expensive real estate market in the country, and rest of Maharashtra is set to become costlier, as the state government on Thursday announced increase in ready reckoner rates by an average seven per cent, effective Friday.
The stamp duty on property transactions, calculated on the basis of RR rates, would go up as a result.
Revenue minister Eknath Khadse made the announcement in the legislative Assembly here. The increase would be five percent in municipal corporation limits, seven percent in municipal council limits and eight percent in the rural areas.
The government decided to effect only "moderate" hike in RR rates considering the slump in real estate sector and the drought, Khadse said.
Ready reckoner (RR) rates are market values of a property determined by the government for payment of stamp duty.
However, it is to be noted that the increase has come at a time when the real estate sector is reeling under a protracted slowdown in demand due to high prices and economic uncertainty.
The increase in ready reckoner rate which will have a cascading effect on the prices and also the costs for developers is likely to dampen the wobbly recovery being witnessed in certain pockets in the state.
Explaining the impact of the move, a report in The Indian Express says that the construction cost will see an increase as there are many charges payable to civic corporations by builders that are linked to the the ready reckoner rates.
Builders are peeved at the hike. "The government is promoting affordable housing on one hand and increasing RR rates on the other. This is a contrast...," Jayesh Thakkar, President, Credai Nashik, has been quoted as saying in a report in The Times of India. Credai is the Confederation of Real Estate Developers Association of India.