Customers to gain from reduction in stamp duty; hike in commercial tax to increase input costs for builders
The real estate sector is not feeling particularly gung ho about the new announcements made in the Budget. Nevertheless, the proposals indicate that the government has taken into consideration problems faced by the sector, said representatives of builders.
Confederation of Real Estate Developers Association of India (Credai) Kochi chapter president M.V. Antony welcomed the proposals, but felt that much more could be done to help realty sector. The pro-active approach adopted by the government needed appreciation, but the real beneficiary in the present context was not the builder, he said.
The customer stands to gain from the reduction in stamp duty. This, in turn, could be considered a positive development as the building segment thrives on the support of customers. More customers could mean more business and hence higher turnover in the real estate sector. On the other hand, the hike in commercial tax from 13.5 per cent to 14.5 per cent on various items including steel would result in an increase in the input costs for the builder and affect the sector adversely. The present rate of stamp duty at seven to nine per cent in Kerala is among the highest in the country. The national housing policy implied a stamp duty of only two to three per cent, he pointed out.
A.R.S Vadhyar, a builder, hailed the reduction in stamp duty. The real estate sector has been going through a stagnant phase. The reduction is bound to attract more buyers for apartments and may help improve the situation in the industry marginally.
A major issue plaguing the housing sector in Kerala has been the steep hike in land prices. Land prices have shot up much beyond the expectations of commoners. Land has become unaffordable to the average income groups in Kochi and several other cities. One of the prime reasons behind the phenomenon is the artificial jacking up of prices by the brokers’ lobby.
The modus operandi of most of the brokers is transfer of possession within a short period of time. The property is sold at a huge margin to a third party by the brokers, who make big bucks in the medium term. The Budget presented by the Finance Minister takes cognizance of the situation and attempts to curb the unhealthy practice.
The imposition of double stamp duty on transfer of property within three months of registration, is intended to be a move to prevent unfair deals by brokers. Builders are of the view that the initiative will not serve the intended purpose. The brokers do not register the property in their name. And if they do, they could hold it for three months to overcome the present restriction, Mr. Antony said.