Not to Hike Ready Reckoner Rate in Maharashtra

The Maharashtra government has decided not to hike the ready reckoner (RR) rates next year.

The decision comes in the wake of the state government’s plan to stabilise the steep increase in housing prices in all metros, and two- and three-tier cities. An unchanged RR aims to boost the real estate sector, which is reeling under a slowdown In the past, former chief minister Vilasrao Deshmukh too had taken a similar decision ahead of evolving housing policies in 2006 and 2008,” said an official in the Ministry of Urban Development and Housing.

The state government had

earlier planned to increase the ready reckoner rates by 15 to 20 per cent from January 1, 2016. However, after considering all aspects related to housing and related industry, it decided not to go ahead with any increase next year.

The decision, said the official, would also help the state realise Prime Minister Narendra Modi’s pet project ‘Housing for All by 2022’.

According to the official, during a preliminary spadework for the housing-for-all project, it became apparent to the government that a steep hike in RR rates would be detrimental in sustaining housing projects.

“The preliminary report indicated that sale and purchase in the housing sector across the state have slumped by almost 30 per cent,” he said.

A senior Cabinet minister said, “Housing-for-all remains high on our agenda. While the state government, along with the Centre, has set aside its own phase-wise projects to reach out to the weaker and backward sections, the role of private players in providing the stocks affordable to people cannot be overlooked. Moreover, the housing industry cannot be seen in isolation. Along with the housing sector, other related sectors too would benefit.”

Earlier, several associations related to the housing sector and developers’ associations had requested the government not to slap a steep RR rate. “A hike in RR triggers a chain reaction as it leads to an increase in stamp duty costs, premium paid on Floor Space Index (FSI) and property tax,” said a developer, adding that it further increased the cost of houses.

Buyers pay stamp duty equivalent to 5 per cent of the RR value or the actual property value mentioned in the agreement, whichever is higher.
The reason for not hiking RR also aims to curb the transfer of black money in the real estate sector. Developers often encourage a sizeable component of black money or cash transfer to provide relief on actual property prices.

It is argued that a rise in RR could also translate into rise in charges for development agreement on a new plot purchase, premium paid to municipal corporations for fungible FSI, staircase premium, open space deficiency and car parking as they are equated and defined on the basis of RR rates.

“It is a fact that any move to hike RR rates will lead to developers passing the increased cost to buyers. At a time when the Centre and state have declared affordable housing for all, it will have to initiate policy measures to make the housing sector more robust and keep the prices stable,” a senior official said