Brokerage firms and industry leaders have said that transaction costs such as goods and services tax (GST), stamp duty and registration fees are already higher and that any addition will impact homebuyer sentiment.
“We have approached the state government and requested that they continue to benefit from the reduction in the circle rate as it has had a definite and positive impact on real estate transactions, especially in category A localities such as Maharani Bagh, New Friends Colony,
Park, Vasant Vihar and Hanuman Road. We hope the momentum will continue if there is no change in the existing guideline,” said Harsh Bansal, head of the Delhi real estate branch of the Confederation of Indian Industry.
In December 2021, the Delhi government had extended lower circle fares by 20% until June 30, 2022. Now, the Municipal Corporation of Delhi (MCD) plans to raise the transfer fee.
Officials, however, said a proposal had been sent to the Chief Minister to extend the benefit until December 2022.
“Many properties that have been on the market for a long time, but have not found a buyer, have been sold due to the circle discount. The decision to continue with reduced rates, if implemented, will help both buyers and sellers,” said Amit Goyal, CEO of India Sotheby’s International Realty.
“Any changes to circle rates should only be announced as part of a comprehensive exercise in streamlining and recategorizing settlements city-wide. This is essential to ensure harmony between circular tariffs and real market prices. We recommend that the department consider creating subcategories within the AH categories, if necessary,” he said.
If circle rates are restored to previous levels in Class A localities where market rates are significantly lower than circle rates, it will be highly counterproductive, experts said.
In these settlements, prevailing rates, especially for large plots, remain below circle rates, despite the 20% discount granted by the Delhi government and extended until June.
“If the reports that MCD plans to raise transfer fees are true, we believe it will have a negative impact on the real estate market,” Goyal said.
Since Delhi is primarily a resale market, brokers said this would impact high-value transactions.
Experts have proposed the creation of additional categories such as A+, B+, and C+ and colony upgrades instead of circle status boosts for each colony.
“The reduction in circle rates will benefit both buyers and sellers. However, an increase in transfer fees will negate the move and buyers may show dissatisfaction with the purchase of the property as the transaction cost is already higher. high,” said Shashank Vashishtha, Executive Director, eXp India, a brokerage firm. “We urge the government to make a balanced decision so that buyers, as well as sellers affected by multiple cost cuts, can make a balanced decision.”
Developers said that with customers focusing on well-being and convenience, there is a shift towards properties that have large outdoor spaces and are part of an integrated township.
According to an MCD official, the transfer tax will be 4% for men, compared to 3% currently, and 3% for women, compared to 2%, once the proposal is approved.
Transfer duty is calculated on the recorded sale value of an asset.