HYDERABAD: Ban of currency notes of Rs. 500 and Rs. 1,000 denominations had a big blow on real estate sector which thrives on unaccounted or ‘black’ money. Since all deals of real estate are formalised by paying stamp duty and taxes to the Registration Department, the latter’s revenue too plunged considerably soon after the Centre’s decision.
However, a few days later, the department’s revenue started rising, thanks to the State Government’s decision to accept banned currency notes towards payment of stamps duty and registration.
The registration of land transactions which is the key indicator of the path of progress has dropped by over 65 per cent as only 14,000 documents were presented in Sub-Registrar offices to complete the sales since November 9, the day after Prime Minister Narendra Modi’s announcement, against 40,000 documents from November 1 to 8.
But the government has earned its share of revenue from stamp duty as it collected Rs. 82 crore in the period - November 9 to 18 - against Rs. 122 crore from November 1 to 8.
Registration officials attributed the phenomenon to buyers and sellers resorting to advance payment of fee with a view to dispose of scrapped currency on transactions over which they have already reached an understanding but delaying in documentation till full payment was made, making use of a four-month leeway that was given.
Another reason for the registrations was the adjustments that the sellers resorted to by giving up their land holdings in lieu of huge loans that they borrowed and were in no position to repay in the present circumstances.
The steep decline in real estate market took place at a time when registration of lands recorded a 35 per cent growth up to September, the highest since the formation of Telangana. It occurred when the buoyancy was expected to go up further after Diwali. Sources said it was unlikely that the real estate sector would recover in the next six months and, possibly, it might even take a year.
The sale of agricultural lands, flats, house sites and mortgage/gifts/partitions/settlements, both before and after demonetisation, was the highest in Ranga Reddy district. Only 700 documents pertaining to transactions in agricultural lands were registered in Ranga Reddy post-demonetisation against 2,000 documents from Nov. ember 1 to 8.
