The steep boost in ready reckoner (RR) rates announced by the state government last week may cause Property prices to rise in Maharashtra’s new projects by over 15%. In addition, rising prices for critical commodities like steel and cement will result in greater development expenses, some of which will undoubtedly be passed on to consumers. Let’s cover the property prices rise in Maharashtra by over 15%.
After being stable for the previous four years, the average ready reckoner (RR) rates in municipal areas have increased by 8.8% from April 1 – except in Mumbai, where the rise is relatively small.
Due to a substantial surge in construction costs of Rs 400-600 per sq. ft. and growing inflation in major commodities such as steel and cement, developers said last month that they intend to raise prices by 10-15 percent in new launches. As a result, raw material prices have risen by nearly 40% in the recent year.
Prices in Mumbai city have grown by 0.84 percent, while rates in Mumbai suburbs have increased by 3.83 percent. But we have many flats for sale in Pune.
Let’s cover some area’s growth in percentage:
Thane’s municipal regions have seen a 48 percent growth, Panvel’s 9.24 percent, Navi-8.90 Mumbai’s percent, and Mira Bhayendra’s 8.30 percent. Nashik has had a 12.15 percent growth, Pune has seen a 6.12 percent increase, and Pimpri-Chinchwad has seen a 12.36 percent increase.
Increases in raw prices, RR rates, and a planned Metro cess of 1%, if imposed, will, according to industry analysts, add to the burden on house purchasers. Because the rate rise has been larger for suburban municipal districts, representing a large part of residential sales and launches in the Mumbai Metropolitan Region, RR rates are bigger in the central and affordable sectors (MMR).
Top real estate builders in Maharashtra
Top builders are valued using ready reckoner rates as a benchmark. It calculates capital gains for income tax purposes and pays stamp duty to the state government. Premium, Transfer of Development Rights (TDR), and Floor Space Index (FSI) rates are also tied to RR rates, raising homes’ costs and prices.
The jump in RR rates has come at the most unfortunate moment when the residential market is experiencing green shoots of revival due to the affordable combination of the lowest mortgage rates, realistic pricing, and developer incentives. These increases are expected to depress the homebuyer attitude, extending the recovery phase, particularly in premium MMR and Pune locales.
The effect of the RR rate on stamp duty paid by house buyers varies, and in circumstances where the RR rate is higher than the current purchase price, stamp duty will pay at a higher rate. Stamp duty is charged on the purchase price or on top of the current RR rates. If the purchase price is still greater than the revised RR rate after the current adjustment, the house buyer will not be required to pay stamp duty. However, the payout for property buyers will rise in locations where RR rates are greater.
While stamp duty may arise on a case-by-case basis, FSI premiums are connected to RR rates. An increase in RR rates would result in higher premiums, impacting developers’ overall project costs. With the developers bearing the brunt of input costs, house purchasers are also anticipated to bear the brunt. A greater FSI premium and growing living costs might result in housing prices.
There hasn’t been an increase in the sale price of properties in the past 5-6 years. Thus, the hike in RR rates is unwarranted. However, premium, TDR, and FSI rates will rise, resulting in a rise in inputs. As a result, the price will rise.
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