By Ubaid Parkar
The 72nd Legislative Assembly Bill states that the Commissioner may fix a capital value by taking into consideration the nature and type of a land and structure of a building and the area of land or Floor Space Index (FSI) of a building. The Commissioner shall initially refer to the Stamp Duty Ready Reckoner the initial phase. Adhoc arrangements such as these are the precursors for chaos.
Furthermore, if the Ready Reckoner does not exist for a particular area, then the market value of the building or the land will be used as base value. In Real Estate, land is a stock and should be valued at cost price and not on the fabricated market values more often appreciated unreasonably by developers through speculative transactions, a bane to the sector which is the cause of vague conditions in the market.
Depreciation is an implicit factor which has to be taken into consideration of old developments or new additions to the land or building. It already has defeated the Real Estate sector in determining the prices of homes today, and now it’s on the course of defeating yet another unworthy adversary.
The value as per the Bill will be calculated by considering the following bases:
- The nature and type of the land and structure of the building
- Area of land or carpet area of building
- User category, – two broad categories of residential and commercial developments, and the commercial segment is further diversified into other classes like offices, hotels up to four stars, hotels of more than five stars, banks, industries and factories, schools and colleges or any other educational institutes, shops, malls, hotels, etc.
- Age of building
The carpet area is another area of subjectivity which valuation so very much adores. A standard rate of carpet area will differ from the Built Up and Super Built Up rates that developers offer today. This creates a duality in the values, further validating a cost factor to be utilized. But then again there will be schools of thought that may label this as contentious.
The age of the building again depends on the complete redevelopment of the building; the development of the vicinity, civic amenities, and the list could go on. How are these factors to be quantified can be a mathematical nightmare and a mathematicians delight.
The Commissioner is the sole valuator of the above, without any provisions of checks and balances with only references such as Ready Reckoner, the use of which could be subject to litigation, and past data to go by, and discrepancies in carpet areas within developers further complicates issues.
Obviously, what it needs is widespread criticism to gain grounds and it may see a maximum uproar from South Mumbai rather than the suburbs, as their rents were frozen almost seven decades back under the Maharashtra Rent Control Act.
Mumbai and India for that matter are apathetic to such situations till the water goes over. Such decisions are accepted with a fatalistic view and are designed to be hidden behind legal terminologies and jargons intended to confuse the general public. If any furor from South Mumbai does arise, it has to trickle down into the suburbs to gather ground and scrap, if not perhaps revise some of the indoctrinations by the socalled technocrats.