The lowering of stamp duty by the Maharashtra government is likely to give the much-needed boost to both the real estate in the state as well as homebuyers.
The lowering of stamp duty by the Maharashtra government from the present 5% to 2% until December 2020 and further to 3% until January – March 2021 is likely to give the much-needed boost to both the real estate in the state as well as homebuyers. Though temporary in nature, this is a strong inoculation into the dampened market sentiment and will help in reviving sales.
“The move will reduce the overall cost for buyers and, hence, encourage sales. The low interest regime coupled with stable prices are also likely to increase demand in the coming future. We hope that other states will adopt a similar strategy as it will boost demand for homes and help in the revival of the economy,” says Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and PropTiger.com.
The other notable benefits of lowering duty is that it increases compliance and, hence, may positively impact exchequers revenue.
“Apart from the obvious homebuyer benefits, the government can generate badly-needed revenue via increased registrations after the most severe downturn in recent history. Affordable and mid-segment properties, which are in maximum demand, will see the most traction from such this move,” feels Anuj Puri, Chairman, ANAROCK Property Consultants.
Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI (National), says, “The fiscal advantage extended by the Maharashtra government will make many fence-sitters take a decision on buying the home of their choice. Lower interest rates and stable prices may also work in their favour. We expect other states to follow the path, which would boost sales of the properties and help the sector recover faster. As such, it would also help in revival of the economy and employment generation.”
Industry experts say that this move will benefit ready-to-move-in apartments the most as OC-ready projects do not attract GST and the reduction in stamp duty will now bring down the transaction cost for such apartments to a very negligible percentage.
“We had been demanding a reduction in the transaction cost since quite sometime and now we wholeheartedly welcome it. The timing of this move could not be better as it comes at the back of a substantial reduction in the repo rates. The reduced borrowing cost, negligible transaction cost and developers willing to offer lucrative prices create a great opportunity for serious consumers to make a purchase,” says Ram Naik, Executive Director, the Guardians Real Estate Advisory.
Experts feel that like Maharashtra, there is case for stamp duty reduction in other states as well as in many other cities across the country, the prevailing circle rate is not in sync with ground realities and there is a case to reduce circle rates in such cities and areas, especially where the gulf is larger.
Achal Raina, COO, Raheja Developers, says, “Even as the Maharashtra Govt has announced stamp duty reduction for a limited period, the decision is bound to reduce the overall cost for end-users, which in turn will provide a much-needed filip to demand during the festive season, especially considering that home loan interest rate is near 15-year low. As NCR is a very important market from the real estate perspective, it is imperative that the governments of Delhi, Uttar Pradesh and Haryana follow suit. This will certainly revitalise demand and help in employment generation as well.”
Uddhav Poddar, MD, Bhumika Group, says, “Stamp duty reduction for a short period of 6 to 12 months is a substantial incentive for a homebuyer. It will help increase property sales. We have also written to the Rajasthan government about the stamp duty reduction. The sector needs help as it is the largest employment generator. Banks/NBFCs are not lending and buyers are also not making payments. It is creating a difficult situation for the sector. If such incentives are extended, that will be good for the sector.”