Buying a Home in Mumbai to Get More Expensive

Mumbai Homes to Get Costlier
Mumbai Homes to Get Costlier
  1. BMC proposes 1% surcharge on all property transactions
  2. Ready reckoner rate hiked by 4% in Mumbai

Buying a home in Mumbai was never easy for a common man but now it’s all set to get even more difficult. Recently the Maharashtra government delivered fresh blows to the already sluggish real estate market in Mumbai.

The first blow came from the Brihanmumbai Municipal Corporation (BMC) when it proposed 1% surcharge on all immovable property transactions in Mumbai. This is set to yield BMC additional revenue of Rs. 3,000 crore. The BMC has requested the state government to amend the Maharashtra Stamp Act, 1958 and MMC Act, 1888 to implement this move.

This has been done by the BMC to tide over its potential revenue loss once the Goods and Services Tax (GST) is implemented.  The homebuyers are likely to bear the brunt of this decision. Developers already worry that this will further dampen the sentiments in the real estate sector.

“On one hand the government wants to make housing affordable by announcing the concession in taxes but on the other hand, they are increasing the stamp duty, increasing the surcharge etc. The end customer will suffer due to this as the cost of housing might increase because of this”, says Gaurav Gupta, Director Omkar Realtors and Developers.

The second blow came on 1st April when the Maharashtra government revised the ready reckoner rates in the state. The ready reckoner rates have been increased by almost 4% in Mumbai. Ready reckoner rates are used to collect the stamp duty from the consumers. These rates differ in various areas.

Real estate experts believe that this move will negatively impact the sector.

“Ready reckoner rates are expected to mirror the market realities which are not looking conducive. It's not just today but for last 3 consecutive years, we have been watching the downward curve of real estate industry. For the sake of giving an increase to property rates year on year, this should not be done. The need of the hour is to actually look at market realities. This will only burden the consumers”, says Gulam Zia, Executive Director, Knight Frank, India.

The first quarter after the end of demonetization, developers were seeing some positive movement in the sector. But moves like these may hamper the consumer sentiments.



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