The steep increase in the minimum rate for land by the Delhi government to calculate the stamp duty to register a property will certainly increase the proportion of white money in real estate transactions.
In order to contain the use of black (unaccounted) money in the sale and purchase of real estate in Delhi, the state government has again revised the minimum rates for land and built-up flats for the calculation of stamp duty required to be paid to register the property.
The state government has proposed to increase the minimum rates for land for the purpose by 150% in the posh areas of Vasant Vihar, Friends Colony, Jorbagh and Lodhi Road among others to Rs 2,15,000 per sq metre from Rs 86,000 per sq metre.
The rate in other high-end markets like Neeti Bagh, Greater Kailash I & II, Panchasheel Park and Hauz Khas, which are placed in category B, has been increased by 100% to Rs 1,36,400 per sq metre from Rs 68,200 per sq metre.
In category C, which includes areas like Kailash Hills, Sukhadev Vihar, East of Kailash and Saket, the minimum rate has been revised by 100% to Rs 1,09,200 per sq metre from Rs 54,600 per sq metre.
Similarly, areas in D category like Jangpura, Jangpura Extension, Janakpuri, Raja Garden and Amar Colony, the minimum rate has been revised upwards by 100% to Rs 87,200 per sq metre from Rs 43,600 per sq metre.
In fact, the rates in these areas were doubled in February 2011. Therefore, areas in category A saw a minimum upward rate revision by five times since February this years. Besides this, the minimum rates in colonies in category B, C and D have been increased by four times during the period.
In other colonies like Andheri, Jama Masjid, Khirki Extn and Carriappa Marg, which are in E category, the present upwards revision is not very steep, at 25%, to Rs 46,000 per sq metre. In February this year, the minimum rate was doubled for these areas also. Therefore, the rate has been increased by 2.5 times since February 2011.
In the areas like Adarsh Nagar, Nebsarai, and Jamia Nagar, which are in category F, the rate has been increased by 15% to Rs 37,030 per sq metre from Rs 32,200 per sq metre. In February, the rate in these area also increased by 100%. Therefore, the net increase since February 2011 is up by 1.3 times.
Despite the proposed steep raise in the minimum rates, they will still remain grossly undervalued in comparison to market rates. In areas like Jor Bagh, Vasant Vihar, and Lodhi Road, where the minimum rate has been pegged at Rs 2,15,000 per sq metre, the going market rate is over Rs 10 lakh per sq metre. Similarly, in Greater Kailash, where the minimum rate has been proposed at Rs 1,36,000 per sq metre, the going market rate is around Rs 6 lakh per sq metre to Rs 8 lakh per sq metre.
Therefore, the increase in the minimum rate will not have any direct bearings on the property markets in the posh areas. But, the steep increase in the minimum rate for land to calculate the stamp duty to register a property will certainly increase the proportion of white money (accounted money) in a real estate transaction.
At present, a large number of deals in these areas take place at around the minimum rate. As minimum rate has been increased by four-five times in the posh areas, the white element in a deal will increase substantially.
As white money has a cost, any increase in the proportion of white money in a deal will increase the real cost of a transaction. This will adjust the value of real estate downward. Besides, as the proportion of black money will decline, the availability of money for realty transaction will also come under pressure. This is also likely to bring down the realty prices in the market.
At the same time, the increase in the minimum rate will help government mop up an additional Rs 800 crore.
Besides fixing the minimum land rate to fix the stamp duty, the government has also revised the rates for flats. The minimum rates for built-up flats have also doubled in all the areas. For DDA and cooperative group-housing society flats of areas up to 30 sq metres (300 sq feet) the rate has been proposed to be revised to Rs 34,400 per sq metre from 17,200 per sq metre. In the case of flats in private colonies, the minimum rate will be 1.1 times that of DDA flats of the same size.
In case of flat sizes between 30 sq metres and 50 sq metres, the minimum built-up rate for DDA and group-housing society flats have been proposed to be increased by 100% to Rs 37,200 per sq metre from Rs 18,600 per sq metre. In case of flats in private colonies, the minimum rate of built-up areas will be 1.15 times that of DDA flats of the same dimensions.
If the flat size is between 50 sq metres and 100 sq metres, the minimum rate for DDA and cooperative and group-housing societies has been pegged at Rs 45,200 per sq metre from Rs 22,600 per sq metre. That means, the minimum value of a DDA flat of 1,000 sq feet will be Rs 45,20,000 for the payment of stamp duty to register the deal. In case of flats in private colonies, the minimum rate to fix the stamp duty will be 1.20 times that of DDA flats of the same size.
In case flat size increases by 100 sq metres, the minimum rate will be Rs 52,000 per sq metre. It has been increased by 100% from Rs 26,000 per sq metre. If a flat of more than 100 sq metres is in a private colony, the minimum rate would be 1.25 times that of DDA flats of the same size.
According to the government’s
decision, for flats in buildings having more than four storeys, a uniform rate of Rs 60,000 per sq metre will be taken as the minimum value of built-up rate for DDA, cooperative, group-housing societies in place of the existing rate of 30,000 per sq metre. For multistoreyed flats by private builders, the minimum value will be 1.25 times that of the DDA flats.
In case of independent floors, the minimum value will be calculated on the basis of plinth area (constructed area). Where part plinth area, say one floor, of an independent property is sold, the relevant minimum land cost may be taken for the proportionate plinth area (constructed area) sold and minimum cost of construction applied on the plinth area sold.
The minimum rate for cost of construction is also decided by the government. In category A colonies, the minimum rate of construction for residential use has been fixed at Rs 14,960 per sq metre. In category B, C, and D colonies, the rates have been pegged at Rs 11,870 per sq metre, Rs 9,500 per sq metre, and Rs 7,600 per sq metre, respectively. In the category E and F colonies, the rates have been fixed at Rs 6,410 per sq metre and Rs 5,600 per sq metre.
