Circle rates hiked by as much as 15%

GURGAON: In a move to bring down the gap between the “white” and “black” money paid while purchasing a property, the Gurgaon administration has enhanced the collector rates (or circle rates) for registration of property by up to 15%, effective from this financial year.

Collector rates are the minimum floor rate one needs to pay in order to register a property. In order to bring some parity in the upmarket residential and commercial areas with the district administration has decided to bring in a balance in the hikes by increasing marginally in areas where the circle rates are already high and increasing up to 15% in areas where there is scope.

This, according to market analysts, would be a boost to the genuine home buyers in more than one way.

According to Ramesh Menon, a real estate analyst and founding director, Certes Realty Ltd, the overall prices might not be affected greatly by increasing the circle rates. “By increasing the white component in a property, the home buyer would be able to borrow higher amounts. Also, with the market being driven largely by investors, increasing the circle rates will encourage genuine home buyers,” explained Menon.

Added Santosh Kumar, CEO – Operations, Jones Lang LaSalle India, that there might be immediate apprehensions about the prices but in the long run, hiking circle rates would only bring in more transparency.

“Property rates are more based on the demand and supply rather than simply circle rates. For a home buyer in the primary sales market will have to shell out extra after the stamp duty and registration fee are hiked. However, for the secondary sale market, this revision in circle rates would be a slight deterrent for the seller as he will have to show and pay tax on a higher white component,” said Kumar.

Nevertheless, some speculated that instead of hiking the circle rates, the state government should rein in some regulatory mechanism to cap the abnormal hike in property prices.

“It is good to say that by hiking circle rates, the government would bridge the gap between the speculative market rates and government rates. However, this only reinstates the over-priced real estate market and benefits the builders’ lobby. The state should bring in a regulator to put a cap on prices and bring in an alternative market of government-owned plots by HUDA. It should promote concepts such as budget homes for the common man,” said Bhawani Shankar Tripathi, governing member, Mission Gurgaon Development.

Circle rates hiked by as much as 15%