MUMBAI, 04 APRIL, 2016: Mumbai’s Ready Reckoner Rates have been hiked by 5 per cent to 8 per cent effective April 1, 2016. “For real estate developers, this will translate into higher prices for land on which to construct new projects, and the home seeker will find home prices that much higher in the coming months,” said Niranjan Hiranandani, MD, Hiranandani Communities and Founder-President National Real Estate Development Council (NAREDCO - Maharashtra).
"This time around, the hike has sent out a mixed signal. The state government says it wants to promote ‘affordable housing’; we did not see any specific mention in the state budget that would promote affordable housing, while any increase in the Ready Reckoner Rates would appears to be in contrast, given that any increase in Ready Reckoner Rates impacts home prices,” he added.
The state government is working on making things easier for real estate, as part of its ‘ease of doing business’ initiative, that is a positive, said Niranjan Hiranandani.
The quantum of increase, which comes three months later than the norm, has been kept to a single digit - an average of 7 per cent across the state, he pointed out. “In the past few years, Ready Reckoner Rates across the state have been increased by an average of 14 per cent. From one perspective, this year’s hike is almost half as compared to the past few years, and from one perspective, can be viewed as having the potential to be a positive for the real estate industry. This is what makes this year’s hike in Ready Reckoner Rates ‘mixed signals’,” added Niranjan Hiranandani.
The trend over the years was that the state government would revise the Ready Reckoner Rates every year with effect from January 1 i.e. the calendar year. Last year, on Dec 31, 2015, the state government passed an amendment, deferring the decision on the Ready Reckoner Rates by three months to April 1, 2016. This was in response to a demand by a section of real estate developers for modification of the Ready Reckoner Rates so that they would be ‘in sync’ with the financial year, he added.
“Another way of looking at it was that the state government gave a three month long ‘window of opportunity’ to home buyers, enabling them to buy a home while calculating stamp duty etc at last year’s Ready Reckoner Rates. So, there have been positive moves from the state government on some issues, and they have not accepted the demand for ‘status quo’ of the Ready Reckoner Rate in 2016 – which is why I see this as a ‘mixed signal’,” he said.
“I hope the state government, moving ahead, will bring in initiatives which will help make the dream of ‘Housing for All by 2022’ a reality, as also power the creation of ‘affordable homes’,” concluded Niranjan Hiranandani.
~ Niranjan Hiranandani is Founder & MD, Hiranandani Group, his recent initiative is Hiranandani Communities. He is the Founder and First President (Maharashtra), National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.