Developers say this is the first time such an initiative has been taken by the Gurgaon administration, proposing a 15 per cent cut in circle rates.
The Gurgaon administration has proposed a 15 per cent cut in circle rate of properties. This move is aimed at pushing more home buyers towards investing in the realty market and injecting momentum in an otherwise sluggish realty market. The proposal has been sent further to Haryana government for approval.
Realtors say that this move by the administration will help to restore confidence in the real estate market which is reeling under a prolonged downturn.
Realty developers are saying this is the first time such an initiative has been taken in Gurgaon which will see the circle rate graph going downward. Otherwise, the past record has been that circle rates have only been hiked, never slashed.
According to the Gurgaon administration report, the property circle rate was kept static in the last two financial years 2014-15 and 2015-16 but this approach failed to raise the home buyers’ sentiment.
According to Dimple Bhardwaj, spokesperson of Raheja Developers, “this is one of the appreciated course of action by the local body to cut the circle rate which will lead to the correction in property prices. It has been noticed that in some areas of Gurgaon, circle rates are higher than the market rates of land. So this has to be justified accordingly also to boost the realty market.”
“Everyone in the real estate market in Gurgaon/NCR has been expecting some positive steps from the government to boost the market. So, in that regard, this is a positive move. It will reduce the circle rates by 15 per cent in Gurgaon and 15-25 per cent in other cities of Haryana. We (real estate consultants) consider it a good step,” says Harish Arora of Saksham Services.
“This news is good for real estate investors also. The hike in circle rates in past years had pushed up the cost of property registration and investors were not showing interest in real estate. But this news may get them back to real estate. For end users also it’s good news as now they have to pay less stamp duty on the registration of properties. So it’s a win-win situation for both the government (as revenue will increase if the real estate trading increase) and end users/investors who will have to pay less for property registration,“says Arora.
Understanding circle rate and market rate
Circle rate is the minimum price at which the transfer or sale of any kind of a property takes place. These rates are fixed by the state government and are reviewed from time to time according to market statistics. The circle rates may vary within cities in the same state depending upon the property rates of that locality.
Impact on real estate transaction
Property circle rate is the base value on which state government collects stamp duty and registration fee on the property being bought or sold. Apart from stamp duty, government collects 1 per cent of total cost of the property as registration fee. So we should be aware of such hidden costs while making real estate transactions.