Real estate companies hail stamp duty cut

Anil Urs Bengaluru | Updated on March 08, 2021

Say move will promote affordable housing

Real estate companies are buoyed over stamp duty cut in Karnataka Budget 2021-22.

Chief Minister BS Yeddiyurappa on Monday, while presenting the budget for fiscal 2021-22, said the government, with an aim to promote affordable housing, is lowering the stamp duty to 3 per cent from 5 per cent for the first registration of apartments valued between ₹35 lakh and ₹45 lakh.

According to Anarock Research, Bengaluru has a total unsold stock of nearly 59,350 units across all budget segments. Of this, just 24 per cent is within the ₹45 lakh price bracket, while 64 per cent is within ₹45 lakh to ₹1.5 crore budget range.

Positive sentiments

Ashish R Puravankara, Managing Director, Puravankara Limited said “This move will create positive sentiments for the buyers and push several fence-sitters who were waiting for a lucrative opportunity to invest. This decision will boost the demand for affordable houses in the state and encourage newer projects in this category thereby further motivating the buyer with more options to choose from."

"While it would have been a delight if the same reduction was applicable across all the segments and not restricted to only houses ranging between ₹35-45 lakhs,” he added.

Boost for affordable houses

Rajendra Joshi, CEO, Residential Brigade Enterprises,“The reduction in stamp duty for apartments priced between ₹35-45 lakhs is a welcome move as it will bolster the affordable segment. It would have been far more beneficial if it was extended to other segments as well, given the burgeoning rate of expansion not only in Bengaluru but also the rest of the State. While the stamp duty benefit has been currently declared for the fiscal year 2021-22, we need to keep in mind that the cycle of planning to execution to registration of properties is significantly longer. It would definitely help the real estate sector if this benefit could be announced for a period of three to five years as it will help developers modify their product mix as well as help consumers plan their finances and purchase decisions better. We urge the Government to also consider the mid-segment and provide similar benefits for homes below ₹1 crore.”

Anuj Puri, Chairman – Anarock Property Consultants, said: “While the move does carry a feel-good factor and will strike the right sentiment chord, it is not likely to give a significant boost to housing sales in Bengaluru on the lines of what we saw in Mumbai. Maharashtra had reduced stamp duty for properties across all budget segments - not just one category. The fact is that housing demand in Bengaluru is largely skewed towards the mid segment, involving properties priced within the "₹50 lakh to ₹1-crore budget range. For these properties, the stamp duty charges remain the same at nearly 5 per cent.”

Niranjan Hiranandani, National President, NAREDCO, said, “This is the price band that accounts for a major chunk of sales across various micro-markets, and obviously, will positively impact overall sales, by encouraging fence-sitters to turn buyers. It has been seen that states like Maharashtra, which reduced stamp duty not only saw a surge in total sales, but also a corresponding hike in total stamp duty collected, as revenue accruing to the state. If 2020 saw Covid-19 influenced slowdown, the decisions by the Maharashtra Government to reduce stamp duty effectively helped counter-balance the disruption caused by the pandemic, and NAREDO hopes that other states follow suit.”

Sarita Hunt, MD, Bangalore, Savills India,:

“This will be a much required booster for the residential real estate sector in the State, especially for the affordable housing. The revision of the stamp duty will benefit the fence sitters and give a major boost to affordable housing buyers. A similar move of stamp duty revision positively impacted the home buying trends in Maharashtra and we hope to see similar result in Karnataka as well. Developers will also stand to gain as this will help them boost sales, sell existing inventory which has been available due to sluggish sale during the pandemic.”

Published on March 08, 2021

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