Gurugram Realtors Calls For Rationalizing Of Circle Rates

In a sudden move, the Gurugram administration decided to increase the circle rate by up to 90% at some of the posh localities of the city, at a time when the real estate sector is still recovering from the setback by COVID19. The revived circle rate came into effect on April 8. The city realtors called out to the administrators to look into the matter and roll back the increase as it can have cascading effects on the city's growing sales, which have been better than the neighbouring cities in NCR. Sanjeev Arora, Director, 360 Realtors, says, “Instead of increasing the circle rates by 90%, the administration should have stayed only with its decision of November 2020 of imposing additional tax liability where the differential between market price and circle rate is up to 20%. The current decision will dent the real estate market, which is in the revival mode after the COVID situation. In all our dealings with the buyers, we have concluded that they are looking for respite. Right now, the developer community is using all means to help the buyer realize their dream of owning a real estate asset, but the community needs support from the government. The rates in Gurugram are already high, and we hope that the administration realizes it.” The Gurugram administrations’ decision to increase circle rates cannot be justified when other states are reducing stamp duties. For quite some time, the developer community has been demanding a cut in circle rates to infuse confidence in the market; the circle rates were already very high, and this increase will prove detrimental for the realty sector. Achal Raina, COO, Raheja Developers, says, “We have to look at states that are trying to help the buyers save money in these challenging times. We have examples where states have reduced stamp duty, and Gurugram has gone ahead with an increase in circle rates. We request the administration to deliberate on the ways to help the real estate sector in the city. The demand in the city is high, and we have been witnessing a good number of sales; this will automatically mean good revenue. However, increased circle rates will force the buyers to go into the shell, which will affect the revival.” The real estate market has been in the revival mode as buyers have been thronging to get hold of a real estate asset. According to JLL Q1 Residential Market Update - Q1 2021 report, the Delhi NCR market has performed much better than all other major cities in terms of new launches, as the region witnessed a jump of 111% in Q1 2021 over Q4 2020. Compared with Q1 2020, NCR added approximately 6,750 units in Q1 2021, a Y-o-Y increase of 9%; out of the total, approximately 52% of the new supply was in the affordable segment, according to ANAROCK's Q1 2021 data. The number of launches in Gurugram is better, which points to the demand for property in the city. When Maharashtra reduced the stamp duty, it recorded around 12,000 property registrations in March; the state also decided to maintain a status quo on circle rates.  The state government decided in August 2020 to reduce the stamp duty on selling deed documents registered between September 1 and December 31, 2020, by 3%. From January 1 to March 31, 2021, the relaxation proceeded with a 2% reduction; Resultantly, Mumbai saw a surge in property registrations. Pradeep Aggarwal, Founder & Chairman, Signature Global Group, Chairman, ASSOCHAM, National Council on Real Estate, Housing and Urban Development, says, “This year, the Delhi government has decreased the circle rates. We were expecting that the Haryana government would decrease the circle rates. The move to hike the rates would discourage investors from buying properties. The sector needs support from the government, and buyers are also looking at ease of buying. On its part, the real estate sector has kept the prices subdued for years now despite rising raw material cost; buyers constantly looking for some respite in prices, which is only possible through a reduction in circle rates and stamp duty. We urge the administration to look into the matter and take preventive measure."