Will Flats in Pune be expensive now? Impact of Increased Stamp Duty on Real Estate Market

Global economies have been grappling with an economic fall-out in the wake of the Covid–19 pandemic. Since the epidemic, every industry has adopted ways to get back as close to pre-Covid times as possible. Property sales across India had come to a standstill after the coronavirus outbreak. It had immensely hurt residential sales across the country. Pune’s real estate market has not been any different. Many state govt. took measures to give a boost to this sector. Maharashtra Govt. led from the forefront and made stamp duty cuts for more than six months. However, this honeymoon period is going to end soon. The Maharashtra government is all set to hike stamp duty on house registration by 1 percent from the next financial year. Check out below facts & impacts of increased stamp duty on flats in Pune..

Increased Stamp Duty : Facts and Impact

Facts

The last few months have been a golden time to invest in residential projects. The lending rates were low, lower stamp duty meant a considerable amount of saving for buyers. The government’s two-year concession from stamp duty hike ends in March 2022 and the duty will rise by 1 percent to an effective rate of 6 percent of the agreement value from the current 5 percent. This will make flats in Pune costlier from April onwards.

Also Read:  https://www.namratagroup.com/blog/hidden-cost-checklist-for-buying-new-home/

Besides this hike, the stamp duty on the gifting of a house or property to a close relative will see a massive rise from just ₹200 to ₹1 lakh (if the property costs ₹1 crore). So basically, the ₹200 stamp duty was a base price which will be hiked to 1 percent of the property value. The Maharashtra government via a notification on February 8, 2019, had levied additional stamp duty in the form of surcharge, which was to be effective from the same year on instruments of sale, gift, and usufructuary mortgage in respect of immovable property situated within the municipal corporation area, wherein urban transport projects are being undertaken.

In March 2020, the Govt. granted a two-year concession effective from April 2020 for houses registered within the Mumbai Metropolitan Region, Pune, Pimpri Chinchwad, and Nagpur Municipal Corporations. This waiver will now end on March 31, 2022. Other than a sale transaction, the impact will be quite significant on a transaction involving the gift of the immovable property too. As of now, the stamp duty on a gift of a residential flat to husband, wife, son, daughter, grandson, granddaughter, wife of the deceased son is merely ₹200. But from April 2022, the same transaction will attract a 1 percent stamp duty on an ad valorem basis, considering the flat’s market value.

Impact

• It is considered a significant raise making Maharashtra among the costliest states for home buyers. Those buyers eyeing bigger homes especially flats in pune would now have to settle for smaller ones, those aspiring for premium homes would make do with semi-luxury homes.
• This will hurt developers since most of them had sold houses promising to pay the stamp duty on behalf of the buyers under schemes.
• Homebuyers will fund it tough to crack steal deals from developers. Earlier they were sitting on large housing inventories, due to slow economic activity. This made a great case for aspiring first home buyers to negotiate the best deals & offers. You could even get good discounts with the developer considering lesser demand. Now with less inventory, negotiation would be tricky.

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Conclusion

Whatever said and done, real estate market would remain the best investment bet even now. With a volatile stock market, exorbitant Gold rates, low rates in FDs, real estate seems to be the only haven for individuals. The greatest factor is the availability of cheaper EMIs. Banks are offering home loans at discounted rates. Cheaper loan rates from banks can help borrowers to either reduce the equated monthly installments (EMIs) or get better eligibility. If you are looking to buy property or flats in Pune, the lower home loan lending rates may be a reason compelling enough to have one. You can still buy your dream abode at a relatively lower price, book one now!