Market watchers question idea of linking RR with market rates of property
The state government has once again hiked the ready reckoner (RR) rates with effect from January 1. The rate, which has touched a maximum of 30 per cent, is used to calculate the minimum registration charges and stamp duty to be paid at the time of registering a property transaction. An increase in RR rate means higher stamp duty for home buyers. Over the last five years, the rate has nearly doubled.
Industry watchers say the increase is in line with the rise in property prices across the Mumbai metropolitan region. “The government is trying to peg the rate closer to the market value. But the market value itself is based on speculation of the developers. So why should the RR rate be based on prevailing rate rather than a fair rate?” asks Pankaj Kapoor, founder and managing director of Liases Foras Real Estate Rating and Research. He said since 2007 there has on an average 100 per cent rise in property prices in Mumbai metropolitan region.
The rates in areas such as Colaba, Malabar Hills, Cumballa Hills, Worli, Parel, Sewri, Dadar and Naigaon have seen a sharp rise. Between 2008 and 2013, it increased on an average 120 per cent across the five zones of Worli, 101 per cent across the 16 zones of Malabar Hills and Cumballa Hills area, and nearly 99 per cent across the 20 zones in Parel-Sewri belt.
In suburbs too rate hike is startling. The average rate across the 16 zones of Borivali has jumped 160 per cent between 2008 and 2012. In Vile Parle, Chembur and Mulund, it has risen by roughly 70 per cent.
During the same period, the market value of property across the Mumbai metropolitan region has nearly doubled and the difference between market value and RR rate is shrinking, say market watchers.
“Ideally there should be a gap between the RR rate and the market value. The RR rate should not be derived on basis of market rate, which has a high tendency to be volatile,” said Anshuman Magazine, Managing Director of CBRE South Asia.