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DREAM HOUSE in despondency

M. Sai Gopal
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Proposed hike in land values has taken away the spirit out of buyers as well as builders who are fearful of increasing burden of costs, reports M. Sai Gopal

A property buyer peruses registration documents.- Photo:Vipin Chandran
A property buyer peruses registration documents.- Photo:Vipin Chandran

As the Stamps and Registration department is getting ready to propose a new set of market values for land under municipal corporations, which will come into force from April, a sense of despondency has set in among those planning to purchase a dream house in Hyderabad.

The decision to hike market values has not gone down well among the builders’ community too who are fearful that a hike at this stage will set back registrations and construction activity in the city.

Buyers also are questioning why the State government has decided on further burdening them with increased market values of land.

The only silver lining in the bleakness is the decision of the authorities to put up the proposed market values on the web seeking public opinion. Organisations working for the sake of apartment-owners, have already made it clear that they would oppose the proposed hikes.

“The government is more interested in achieving its annual targets. It is not worried about providing affordable housing options to the middle and lower income class in Hyderabad. Not a single sop has been offered to encourage buyers in affordable housing,” says Federation of Association of Colonies and Apartments (FACA) General Secretary V. Kamesh Babu.

Senior industry representatives feel that there is an urgent need to set up a regulatory body on the lines of TRAI, which regulates the telecom sector, or ministry that will protect the interests of the stakeholders. Such a body will also put an end to knee-jerk reactions like hiking market values of land without consultations, they say.Industry insiders say that the government departments like the Stamps and Registrations will be inclined only to attain their targets. Such departments do not have any mandate on promoting affordable housing.

Their only goal is achieving target, and the one-sided approach of hiking market values is damaging the much-publicised Union Government policy of housing for all, they claim.

“A central body or a ministry to regulate real estate sector has been a long-pending demand of ours.

You can’t hike market values because it will have a huge impact on the cost of the end product. Due to such unpopular decisions, the affordable housing bubble has burst in India,” feels president, A.P. chapter of Confederation of Real Estate Developers Association (CREDAI), C. Shekhar Reddy.

Members of builders’ associations point out that hike in market values will simply burden the end user. “The decision to hike rates was kept pending for the past six months because of the public uproar. The urgency is because the government and agencies have to meet the targets.

People had made huge investments on land when the market was in the boom. They can’t reduce the price now and revision of market values would only burden the buyer,” points out C. Prabhakar Rao, president for A.P. Builders Federation.

The problem with revision of market values, experts point out, is that they tend to have a huge cascading effect on the buyers.

“Taxation in real estate sector here is on percentage basis with respect to the market value of the land. So, once you increase market values, the service tax, value added tax, labour cess, Naala charges and LRS will correspondingly increase. The buyers will simply postpone their decisions to invest,” says P. Ram Naik of Archana Constructions at Nacharam.

Builders point out that the least the government can do to reduce the burden on buyers is to immediately reduce the total registration charges, which is at 7.5 per cent.

The break-up for 7.5 per cent, is five per cent stamp duty, two per cent for transfer of property tax that goes to the local municipal body and 0.5 per cent is the registration fee.

Experts in real estate sector point out that under National Housing and Habitat Policy, the registration charges put together should be less than three per cent. The rules, even under the JNNURM, stipulate that registration charges should be less than five per cent.

“The AP Government has entered into an MoU with JNNURM to access Central Government funds. While the State Government has accessed the funds, it has not passed on the benefits to consumers by reducing rates,” they point out.

The government is more interested in achieving its annual targets. It is not worried about providing affordable housing options to the middle and lower income class







Organisations working for the sake of apartment-owners have already made it clear that they would oppose the proposed hikes

Organisations working for the sake of apartment-owners have already made it clear that they would oppose the proposed hikes


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