Vision of Life; by Sanjay: Ready Reckoner Rates, Stamp Duty & Dream of Owning a Home!

“I'm not a fan of April Fools' Day. I can take a joke; I just don't want to BE the joke.” … Stewart Stafford

Stewart Stafford is an actor, known for movies such as The Escapist, Innocent and Assassins. More than that he is a writer also & above quote surely is the creation of the writer Stewart & the wittiness must have come from the Irish genes he carries from his parents! While growing up most of us have been on the wrong side of the April Fool’s prank & irony of the profession is if you are in real estate then even while you have grown up, you still end up on the wrong side of the April Fool’s Day & this 1st of April 22 wasn’t exception to the rule! Well, you must be wondering what my sharing is about as we have enough foolishness around that I should take fools as my subject, right? Agreed, the real estate is full of fools on every front so, no need to name April Fool’s Day for it but this particular day has very much significance to the real estate business wise as on this date the new financial year starts & so starts the application of new ready reckoner rates as well new stamp duty related policies comes in rule & obviously the creator of all these pranks (sorry read as policies) is, none other than “Mai Baap” State govt! And the fooled ones are, everybody related to real estate in every aspect including the “aam aadmi” which is the end buyer of the homes! Only change is, on this 1st April even the prank maker (read as govt) also got fooled making the April Fool’s Day very special!

Sarcasm & full of it, as when you get April fooled that’s how one can react, right? Now, for the lucky ones who don't know what is stamp duty & ready reckoner rates are, then only I can share what’s it’s relation with real estate & how we get fooled with these two terminologies as well how the govt also got fooled this year. Stamp-duty is a fee charged by the State Govt on ever legal (read carefully) in a certain percentage of the amount of the deal & at a certain rate, over every deal any two parties enter in for an immovable property which in most of the cases is, a land or a built-up structure which we call a home or a shop or an office or an industry etc. And the certain rate per sft which is considered as base for every such deal of that property is call as ready reckoner rate & both this factors i.e., stamp duty percentage figure as well ready reckoner rates which are per sft of the built-up area or open plot are of the property keeps updated (read as increased) every financial year which starts on 1^st April. Now, you will understand the significance of this day for real estate & let’s see how it affects the industry (is it industry in the first place is another aspect? sarcasm dosage) because as of now everything related to real estate has been linked with these two factors affecting economics of every deal. And needless to say, the govt on the background of deficits courtesy of the last two covid hit years on various fronts of the revenue, wants to cover the losses it has incurred via real estate! (who else, again sarcasm).

Well, if govt increases ready reckoner rate on 1^st April & adds something in stamp duty factor like 1% seas for Metro (or anything, does it matter) in the basic 6% then on this 1^stApril the govt got shocked by the scam by its own people (sarkari babus) working in registration dept for registering illegal documents (deals) & that too thousands of it, thus making the govt itself fool! Will share about it later, let’s see this year’s April Fool Day’s impact on the real estate by stamp duty & registration first as we all know real estate wasn’t doing great even before covid & during covid but somehow the last years amnesty scheme or say promotion scheme of just 3% stamp duty has made a big positive impact on the mindsets of the home buyers. And the govt must realize it’s the larger turnover which a successful businessman looks at & not just the big margins of the profit as big margins evaporate very soon (who else but real estate knows this) but the turnover is a healthy sign of a business. Unfortunately, govt hasn’t read the story of golden egg laying hen in Isapniti & feel more stamp duty % means more revenue which isn’t the case. Again, to explain in simple lay-man’s words (like me), if you buy a flat of Rs 1 crore (sochane me kya jata hai!) then as per last year’s promotion scheme you will have to pay stap duty 3% i.e., Rs 3 lakh & now today its 6% plus 1% additional for Pune as we are privileged with Metro (though it will yet take at least three years more to come in full functioning as per me) so we have to pay 1% more stamp duty for any property deal we enter in & around Pune as well PCMC & PMRDA. This in simple words means you end up paying in total Rs 7 lakhs for Rs 1 crore flat or property as per govt which has come in ruling on 1^st April, which is more by Rs 4 lakhs than last year’s scheme! So, the homes or any property deal has become costlier by strait 4% is the outcome.

Then comes the next aspect of this year’s April Fool which is ready reckoner rates & if stamp duty is a burden for home buyer or land buyer then ready reckoner rate’s increase is like rubbing salt on the wounds made by stamp duty dagger! If you think I am exaggerating then let me clarify, every single rupee you pay to any govt or local body (PMC/PCMC) in the form of premium for plan sanctions is directly linked to ready reckoner rates of the land of the respective project. Means the TDR you buy, the fire premiums you pay, the development charges, in case you get a land at cheaper rate then also if the ready reckoner rate of said land is higher as per the rules, then you have to pay stamp duty as per higher rate & the list is unending. Ok, to clarify more about ready reckoner rates, it means govt decides rate per sft of every property, built form or vacant land in the State & fix it for all calculations such as above mentioned. So, these rates have been kept unchanged due to Covid last two years & this year they have been increased by nearly &% to 8% at many locations in Pune. This means you end up paying 8% more premiums on every sq ft area you build, is the outcome!

Now, most people will say, what’s your problem, are you going to pay all these increased stamp duty as well as ready reckoner rate hike charges from your pocket? (read as the builders) As surely you (read as builders) will be recovering these all-added expenses from your flat buyers only, so why are you complaining? Well, the answer or logic of the answer is the same, while there is an extreme hike in fuel prices why the transporters or even rickshawalas protests, are they not going to cover the same from their customers? They are, but a wise businessman knows that any hike in making cost of any product is going to reflect on the price of the end product, making it costlier & creating a burden on the pocket of the end-buyer which in the case of real estate is a genuine needy home buyer! And for such a buyer who is already burdened with so many fronts’ price hikes (petrol to school fees of kids to electricity bills) that the costliest product like a home, however he needs it just goes beyond his buying limits which is the worst thing that can happen to the real estate, is the problem! And this rate hike was not logical or depending on some external dependency like oil prices but self-created is the problem! Agreed govt doesn’t & can’t create land but it does create virtual land i.e., TDR or paid FSI & for that also govt is adding burden by increasing stamp duty & ready reckoner rates which can be avoided without damaging the revenues. I know that the govt too needs revenue to keep it going as all the development as well social works are done through revenues from the stamp-duty collections. But high time to think about policies like free electricity bill or loan waivers at large for a particular spectrum at the cost of a particular industry, is my complaint! Here, the govt must think about turnover Vs big margin aspects before increasing ready reckoner rates or adding sess on stamp duty thus making the homes costly, is the complaint!

By the way, the keen readers must be wondering how the govt itself got fooled this 1st April as I have mentioned it, on this April a scam came in to the light where the property deals which are supposedly illegal means they were not be registered, have been registered with the support of Registrar’s Officers only! In shudhha marathi “Kumpanannich Shet Khalle” i.e., the protectors themselves become hunters here. This way the govt has earned money on stamp duty but the basic deal was illegal, means the buildings have been built without any permission or paying premiums as well the land pieces have been divided & sold without any sanction layout done & yet it’s been registered! High time for the govt (read as entire system) why this need arises as fact is if you take a legal path for building a small home or buy a small plot, is so tedious that many people chose path of illegality & outcome is entire system gets corrupt, which has happened with the registrar & stamps office! Unfortunate is, the people who are real culprits (though some by force) & has sold such flats or plots have been through or have got away with all the money but those who has bought all such homes or plots, are at worst loss of their life as whatever they have paid for such deals has now gone to drain! And how can they be at fault as its like you have purchased an I-Phone from the official I-Phone store by paying full up front with receipt & now police comes after you, seize your I-Phone, saying it’s of theft, “ye baat kkuchhh hajam nahi hui”! But that’s how the system here is, which we must change, is the complaint!

Well, the problem of real estate is, the industry which gives shelter to millions of people, itself doesn’t have a real shelter when it comes to protecting interests of the industry even logically; till that time, enjoy celebrating April Fool’s Day, is all we can do!

Sanjay Deshpande

Sanjeevani Dev.

Please view my sharing about real estate in Pune at You Tube link below..

https://www.youtube.com/watch?v=g4xX7eopH5o&t=5s

Please do visit my blog links below to read about real estate & home buying!

https://visonoflife.blogspot.com/2021/09/choosing-right-home.html

http://jivnachadrushtikon.blogspot.com/2021/09/blog-post_21.html

Creating Togetherness; team Sanjeevani Way (Click link below)

https://www.flickr.com/photos/65629150@N06/albums/72157627904681345

For any of your complaints about city, log in at link below

www.punecorporation.org

Take your issues to Hon PM at link below..

https://secure.mygov.in/

Think Green, Think Life

www.sanjeevanideve.com