The Delhi government’s decision to revise existing circle rates has been largely welcomed by the Delhi real estate circles. They feel it will make property transactions more transparent and check the inflow of black money.
The new rates will be notified soon,” chief minister Sheila Dikshit said after presiding over the Cabinet meeting. Though an increased circle rate means higher price for a residential property, the buyer will be saved from paying more as black component or in cash on a transaction.
Black Money is big problem
Most realtors agree that the transactions, till now, involved a huge chunk of black money. This will now go into the government’s exchequer. An increase in circle rates will also help people avail of home loans as banks disburse loans only on the basis of sale deeds.
RICS India: Positive Move
Sachin Sandhir, MD of Royal Institution of Chartered Surveyors said: “For the actual buyer, it is a good move as one can now avail of a higher loan from banks. The circle rates, till now, were low and it was right of the government to raise it to the levels of Gurgaon or Noida.”
Delhi residential property prices will increase
“The move will cause an increase in residential property prices as the common man shall have to pay a higher amount on registration and stamp duty on the sale, based on the increased circle rates. However, it won’t have much effect on the demand factor,”
“The positive effect is it will reduce black money in the market,” Sandhir said. For example, till now, if one wanted to buy a Delhi property whose circle price was Rs 50 lakh and the transaction amount was Rs 1.10 crore, the buyer would pay stamp duty on an undervalued price of say Rs 50 lakh or whatever amount would have been settled between the transaction money and circle price.
Discourage black money transactions
The balance would be paid in black. In the new scenario, a person will not be able to undervalue the property from the proposed circle price. There will be less room for a black money transaction. This will discourage people from buying and selling property below the market price because the proposed circle rate will cover the gap between the present circle price and its market value.
Indian home loans on 85%
Also, buyers can avail of home loan till 85 per cent of the total circle price as banks give loans only on the white component. The increased circle rates will also diminish the gap between the prevalent market rate and circle rate of an area, limiting the flow of black money.
Tags: Delhi real estate, homes in Delhi, Indian Real Estate, RICS, RICS India, Royal Institution of Chartered Surveyors, Sachin Sandhir
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