By Accommodation Times News Service
By Arvind Jain, Managing Director – Pride Group
Ready reckoner rates and their revisions are a reflection of the government’s assessment of the property market. In most of the states, the ready reckoner rates have historically been lower than the market rates, and not seen annual revision. This rendered them unrealistic, and not a reliable indication of the exact market realities. In the last 10-12 years however, there has been a provocative movement in prices, and this has also reflected in the reckoner rates.
If we take 2009 as a notable exception, the ready reckoner valuations have been positive. However, on several occasions the government had revised the rates by a higher percentage than the market warranted, as the government ventured out to match the ready reckoner values to actual market rates.
These revisions over the last couple of years were considered quite unfair by the real estate market’s stakeholders. They argued that no changes were made during the period of 2009-2010, when the prices fell but the reckoner values were kept the same. Also, the rates were hiked by the government in 2013-’14, although no market appreciation had taken place.
The Maharashtra government’s decision to keep the reckoner rates the same in 2015 was a welcome one, since cities like Mumbai, Pune and some other cities in Maharashtra had seen a rise of about 5-6%. This was also the situation during the 2013-‘15 period, though the reckoner rates for those years were raised by more than 10%.
Given the market scenario that prevailed in 2015, not raising the reckoner rates meant that buyers were not burdened with increased statutory costs of buying property (registration and stamp duty) or heavier recurring cost of property tax – fees that are based upon the reckoner rates.
This move by the Government was especially a boon to lower income households, who are very price sensitive when purchasing properties. At a time when the property market was only beginning to recover from a slow phase, the government had taken the decision to take buyer’s sensitivity to prices into consideration.
In the most recent announcement, the Maharashtra government has further announced that ready reckoner revisions will be done on 1st April 2016, as opposed to the customary date of 1st January. This has given the industry a long and much-needed breather.