There are 3 parties affected with any structural change made in the Government revenue generation system of Stamp duty. The Developer of the property (Seller), Property buyer, & the revenue department of the state. If there is an increase in the stamp duty, the purchasing capacity of a home seeker/buyer is affected. The Developer, these days fears to increase the price, looking at the competition and sudden changes in different policies, especially since 2016. It all started with demonetization, followed by RERA Regulations, followed by GST regime of 12%, followed by Input tax credit calculation to confuse the buyers and make things complicated for the sellers.
This was followed by 5% GST regime and 12% regime running parallelly for confusing the entire market. This was followed by increase in stamp duty from 5% to 6% and a few places like thane from 6% to 7%. This is not all, the lending rate of interest was increased affecting the purchasing power of the new property buyer and increase in burden of interest rate for the existing home loan debtors of the banks. So conclusively, uncertainty is very well accepted economical condition in India. This is not about blaming the decisions of the government, but at the same time making them realise that let stability prevail in the system of Real Estate business. It is already under the tag of most unorganised sector. Being a realtor and representing the developers, realtors and home seekers, I urge to the government to create policies which should not change for at least 10 years.
The revenue will still increase with the builders rising the price and economical growth of the common man. Let every small person grow big with his own house, easy instalment and his wish to never leave India for good and stay back for his economical and fundamental growth.
The lending rate for all the financial institutions should not change for 10 years, when it come to home loan. I know I am not an economist, but definitely a common man who is affected with all the inflations caused by whatever reasons. The price of common salt to build or buy a house is affected by many other factors. A common man manages one thing with difficulty and 13 more things are ready to make him vulnerable to monetary and emotional levels.
Let me suggest:
- Stamp duty may go to 8%, but will not be increased, and at the same time if the revenue is multiplying with the increase in the price of the property, then government should decrease the rates to the tune of profit over previous year’s earnings.
- The developers and the homebuyers should get easy accessible loans on construction and home loans respectively. The rate of Interest should be less than that of any other end use commodity loan.
- Stamp duty rise will give boost to the economical growth of the state. But if the documentation /paperwork for development should be made easier and should be done within 10 -15 working days (The home buyer is scared to buy under construction property today. Even after RERA arriving, the timelines of the developers are not matched).
- For all the common man , I would just say that do not fear any such change, take advice from the realtors on how to save money on property buying. Know the procedures and policies to save money to the tune of increase in the statutory levies and taxes. Invest smartly.
The writer is a Real Estate Expert having more than 27 years of work experience in India and UAE providing extensive knowledge about the real estate community and housing market.