The world economy has suffered immensely since the onset of Covid-19. Every industry was struggling to get back to pre-Covid levels as soon as possible. Real estate investment had taken a back step given the precarious situation, property sales had slashed. To give a push to the ailing sector, the Maharashtra Govt. made stamp duty cuts for a brief period. However, with a substantial rise in property sales in Maharashtra, the Govt. has now withdrawn the stamp duty cut. The government’s two-year concession from stamp duty hike ended in March 2022 and the duty has risen by 1 percent to an effective rate of 6 percent of the agreement value from the current 5 percent.
So what does a rise in stamp duty and registration charges in Pune 2022 mean for the real estate sector in Pune?
Let us dig deeper and understand the concerns.
Background and Current Status:
In March 2020, the Maharashtra Government granted a two-year stamp-duty concession effective from April 2020 for houses registered within the Mumbai Metropolitan Region, Pune, Pimpri Chinchwad, and Nagpur Municipal Corporations. This waiver ended on March 31, 2022. Previously, the stamp duty on a gift of a residential flat for a husband, wife, son, daughter, grandson, granddaughter, or wife of the deceased son was merely ₹200 but now onwards, the same transaction attracts a 1 percent stamp duty on an ad valorem basis, considering the flat’s market value. Stamp duty and registration charges in Pune, Mumbai, Thane, Navi Mumbai, Nagpur, and Nashik on sale, mortgage, and gift deed details will attract a 1% metro cess from April 1, 2022.
The increased stamp duty and registration charges in Pune 2022 is assumed to have some adverse effects on the real estate scenario. One may even think that the sector recovery may slow down. Residential sales that were adversely affected between April and June 2020 due COVID-19 virus outbreak bounced back strongly between October 2020 and March 2021. The demand momentum had just started building up but with this increase, the purchasers in the affordable and mid-segment can feel additional cost burdens. It has only been 2-3 quarters since residential sales volumes have seen an increase.
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HOWEVER, here’s why the real estate sector will NOT get impacted despite the rise in Stamp-Duty & Registration
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Demand for residential property
The Covid-19 epidemic has made everyone think about the importance of owning a home. Those with smaller homes are now looking at buying larger ones to adjust with the Work-From-Home option if the need arises.
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Lower Lending Rates / Cheaper EMIs
The banks offer lower lending rates to buyers (despite the increase recently), it is an opportunity that cannot be missed. So if you have been planning to buy a residential space, it is a good time to take the plunge. While the prevailing lending rates are attractive, the investment is also creating an asset for the future.
Cheaper loan rates from banks can help borrowers either reduce the equated monthly installments (EMIs) or get better eligibility. This means if earlier you could take a loan for Rs an X amount, now with the lower lending rate you could take X+ amount (a few lacs up). So, for the budget you may have decided upon, you might get bigger homes or you may use the additional amount for interior work for the apartment being purchased. A lower interest rate means you may raise a higher amount of loan. So you may be able to buy a bigger home or one with better amenities and at a better location.
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Attractive Deals from Developers
Most developers have announced various schemes, easy payment terms, and discounts. This makes a great case for aspiring home buyers to negotiate with developers to crack the best deals & offers. This is undoubtedly the right time to buy real estate.
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Better ROI (Return on Investment)
With a volatile stock market, exorbitant Gold rates, and low rates in FDs, real estate seems to be the only haven for individuals. Real estate is a more reliable option offering steady returns compared to the highly volatile stock market that comes with heightened risks. It offers a sense of security to the individual that an equity investment cannot provide.
Whatever said and done, home buying would continue to be the best investment bet. The availability of cheaper EMI is the most alluring factor. With attractive payment options to choose from and discounts/freebies from developers, if you have been contemplating investing in real estate for the last few months/years, this is the best time to take the plunge.