The Haryana Government has reduced the circle rate of properties by 15% across all categories – a move that the government hopes will spur demand and bring buyers back to the Gurgaon property market.
Haryana Cuts Property Circle Rates
The last 2 years have been especially bad for Gurgaon’s real estate sector with homebuyers shying away from the market. Developers rolled out offers, freebies and even cut prices in order to revive sales, but with little effect. This has prompted the Haryana government to step in and cut circle rates for property by 15%.
Circle rates are the minimum rates at which the sale or transfer of a plot, built-up house, apartment or a commercial property can be registered. These rates form the basis of stamp duty and registration charge calculation for a property. By cutting these rates, the government hopes to reduce the expensive stamp duties paid by homebuyers, making it more attractive for them to invest in property here.
Developers Ask For More Help
The developer community in Gurgaon – including Vineet Relia of the SARE Homes – feels that with property prices at rock-bottom and developers scrambling to offer discounts, it was only right that the government too pitch in to help the sector.
“The markets have been such that all stakeholders are trying to reduce property prices. Developers have come out with various schemes and discounts, the Reserve Bank of India (RBI) has reduced interest rates, and therefore it was very logical that revenue authorities also come down on the circle rates. I think the next step government should take is to bring down on certain taxation”
Experts Unsure If Sales Will Pick Up
While both developers and the government cheer the move – real estate experts say the cut in circle rates will only have a marginal impact, especially since the circle rates vary from location to location.
“Let’s take 7% as stamp duty of the value of the property and there is a 15% correction. It’s about 15% on the 7% which is roughly about a percent or so. 1% on the overall cost of transaction is not a very large significant sum even though any reduction is always helpful. Hence, it will not have major impact on the overall absorption in the market.” warns Mudassir Zaidi, national director of Knight Frank India.
In spite of this gloomy forecast, developers are holding out hope that the cut in circle rates will help encourage many end users to invest in property.
“The reduction in the circle rate would definitely have a positive impact in the market, because right now there are many end users in the market who are looking to buy a ready-to-move-in property. This move will help reduce burden on their pockets.” says Anupam Varshney, Assistant Vice-President of Sales & Marketing at the Vatika Group
The next few months will see if these hopes bear fruit, or if the slump in Gurgaon’s real estate market will continue.
Reporter : Chankya Bhatia, NDTV
Web Editor : Nikhil Narayan Sivadas, NDTV