March 22, 2018

MUMBAI : Homebuyers could expect some relief as the state government has introduced a provision that will allow reduction of Ready Reckoner (RR) rates. Until now, RR rates, which are revised annually, could only be increased or kept steady.

RR rates are used to assess market value of properties by government; stamp duty and registration charges are paid on this basis. The rates are revised every year on April 1.

The state revenue and forest department has issued the Bombay Stamp (Determination of True Market Value of Property) (1st Amendment) Rules, 2018 that will allow the Chief Controlling Revenue Authority (CCRA) for the first time to either increase or decrease the RR rates.

The March 12 notification amends rule 4 that says in case the CCRA cannot issue an annual statement of rates then the preceding one may be "incremented" in view of "increase" in market rates. The word "incremented" has now been replaced with "revised" and "increase" with "increase or decrease ". The change in the wording signals the government's acceptance of the fact that real estate rates have dipped in recent years.

Mumbai is divided into 700 zones for which RR rates are prepared annually. In the last five years, rates for these zones have been increased by 6-7% annually. However, it was not always so. In 1995, 1996, 1997 and 2001, the government, despite there being no amendment, had reduced the RR rates.

Commenting on the latest change in rules, property valuers said RR rates need to reflect true market value. Mayur Shah, President, Maharashtra Chamber of Housing Industry, said they have been urging the government to reduce the RR rates as the real estate industry has been in a bad shape for the past three-four years.

Shah said CREDAI-MCHI is considering recommending a 20-25% reduction in RR rates. "Earlier, rates were only increasing. Now that Maharashtra, like other states, has a provision to decrease the rates, housing will get a boost," he said.

The increase or reduction in RR rates impacts buyers in a significant way as the 5% stamp duty is to be paid as per RR rates; in some cases, the actual sale may have taken place at a lower rate.

Sunit Gupta, a property valuation expert, said the RR rate for Nariman Point, for instance, is Rs 50,000 sq ft while the market rate is Rs 30-35,000 per sq ft. "Also, builder and buyer have to pay income tax based on the RR rates and not the market rate," he said.

It is the joint director of town planning and valuation who annually assesses rates of lands and buildings for every tehsil, municipal corporation and local body area and prepares a statement. The CCRA then approves these rates and they come into force.

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Source: timesofindia.com