The revenue department of Maharashtra has decided to keep the Ready Reckoner or RR rates unchanged for the new financial year beginning in April. A move that is set to boost the real estate and home-buying market.
In the last year, the registration department has achieved the target RR revenue of Rs 50,000 crore by the end of fiscal year 2023-24. Generating about Rs 49,000 crore by March 28th 2024. Besides, the policy decision taken to keep the RR rates unaltered will come into effect from April 1st, 2024.
To help you understand how unchanged RR rates can boost the real estate industry and home buying here is an exclusive ‘Loan Bazaar’ article.
What is the impact of the Ready Reckoner (RR) rate?
Typically, Ready Reckoner or RR rates are the minimum value set by the state government on properties.
The RR rates directly affect stamp duty, cost of property registration, and property tax liability. So when the value of any of these components rises there is an inflation in the overall pricing of property.
Why have the RR rates been kept unchanged for the new financial year?
It was during the fiscal years of 2019-20, and 2020- 2021 that the RR rates were kept unchanged. One of the major reasons for it was the arrival of the COVID-19 pandemic. However, in 2022-23 the RR rates were increased by 5% across Maharashtra by the revenue department.
Simply because the state government acquired an increase in revenue from property transactions during this fiscal year, the economic slowdown triggered by the COVID-19 pandemic has begun to improve significantly.
With the national election being scheduled during the 2024-2025 financial year. There is a feeling amongst many revenue department officials of Maharashtra that to change RR rates they will have to seek permission from the Election Commission of India.
Due to the model code of conduct, they have set. Hence after reaching a consensus, the Revenue Department of Maharashtra has decided not to alter the RR rates in 2024-2025 and to keep stamp duty low. To create the perfect atmosphere to sell for real estate developers and for an individual seeking a home to buy one.
How do unchanged RR rates affect home buying and real estate?
The decision taken by Maharashtra to avoid altering RR rates at the start of the new fiscal year means that the property price will not increase because stamp duty will not rise. Therefore, the stamp duty for female and male home buyers in Mumbai, which currently stand at 5% and 6% respectively, will remain the same. A major reason why a married man will prefer buying a home in the name of their wife.
Thus, low stamp duty will lead to decreased property prices, encouraging more buyers to purchase a home. Thereby, increasing sales in the real estate industry significantly.
What are the responses of homebuyers and the real estate industry on the decision to increase RR rates?
The response to the Maharashtra Revenue Department’s decision to keep RR rates unchanged for 2024-25 is welcoming with most real estate bodies and homebuyers praising the decision.
Since low RR rates mean less overall stamp duty encouraging an individual to buy their ‘Dream Home’. Also, unchanged RR rates lower the price of property triggering greater demand for it, which enables reality developers to find more buyers.
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