Real Estate Ready Reckoner Rates: What they mean for home buyers
By Nimisha Gupta
Ready Reckoner Rates are the prices of the residential property land or commercial property for a given area and is published and regulated accordingly by the state government on yearly basis.
There are various factors that contribute the hike in real estate price factors and the major part in deciding these prices are the READY RECKONER rates.
- What are READY RECKONER RATES?
These rates are the prices of residential property land or commercial property for a given area and is published and regulated by the respective state government. These rates are regulated and revised on regularly yearly basis depending upon the price corrections.
- How READY RECKONER RATES are important –
The READY RECKONER rates as what it is called in Maharashtra Circle Rates is the name in Delhi. The rate is government estimated property value which differs in every state, city and in different localities. The READY RECKONER rates are the rates which are lower than the running market rates of properties in a particular area. It is minimum rate notified by the government through the registrar or sub registrar office of Mumbai.
Note: this year the rates remain unchanged for FY2018-19.
- How important is READY RECKONER rates for homebuyers & how does it affect real estate markets –
Real Estate prices and markets have no maximum limit at which the property can be sold while the RR rates specify the maximum amount at which the properties can be sold and hence there lead to lot of differences between RR rates and the market rates. The stamp duty and registration fees, to be paid by the home buyer, are calculated on the basis of this market rate. Therefore, a big difference between the RR rate and market rate, leads to a loss of revenue for the government. In rare cases where the RR rate is higher, the stamp duty and registration fees will be calculated on the RR rate. On the other hand, higher RR rates discourage home buyers from registering their properties. By periodically revising RR rates and bringing them closer to market rates in every locality, the state government can increase transparency in real estate transactions and also ensure that they do not lose out on revenue.
The ready reckoner rates are nothing but fair value price for a property set by the state government, where the builders have the freedom to charge premium over and above such rates. Clearly, it shows that a person will have to pay a value much higher to own a house over and above the reckoner rates. Therefore, if a state government revises such rates then it means that a home buyer would have to pay more than before. The ready reckoner rates serve as the biggest revenue source to the state governments.
- D) READY RECKONER RATES in MUMBAI –
RR rates tend to vary in various areas of Mumbai depending upon the market value and the facilities that are provided. The administration has divided Mumbai into 19 divisions and 22 sub zones based on locations. Mumbai is divided into west & east. The division of zones and sub zones is mostly done with reference to main arterial roads and railways lines. The rate also depends upon the type of the property; the value of property of flats and apartments is different from that of plots and independent houses. Stilt parking and open spaces and parking spaces are also taken into account while arriving at assess value for payment of stamp duty. The value of parking slot attached to an apartment is linked to ready reckoner rates.
How parking slots are calculated-
|Stilt Parking or covered parking||Area of parking slot multiplied by 25% of the ready reckoner rate per unit area applicable for the property|
|Open parking||Area of parking slot multiplied by 40% of the ready reckoner rate of developed land in that zone.|
Floor rise valuation of ready reckoner rates in Mumbai –
The government knows that every Mumbaikar prefers flats on higher floors and hence builders’ keeps varying the prices of flats as you keep rising the floors. The Registrar office charge premium on ready reckoner rate on floors located on higher floors. Premiums charged on flats in Mumbai as per the calculation of RR rates:
|Floor of the apartment block||Premium|
|Upto 4th floor||Nil|
|5th to 10th floor||5%|
|11th to 20th floor||10%|
|21st floor to 30th floor||15%|
|31st floor and above||20%|
- E) What is STAMP DUTY in Mumbai –?
Stamp Duty is payable as the % of the higher of declared agreement value and assessed value as per the ready reckoner rate chart. The Stamp Duty rate in Mumbai is same for Males, Females and Joint owners i.e. 6%. Firstly we should understand what the difference between Ready Reckoner rates and Stamp Duty. Ready Reckoner rates are used to calculate the immovable property like commercial or residential buildings or land and Stamp Duty are the charges on them.
- F) How to calculate value of property for payment of stamp duty in Mumbai –
There is 3 simple step to calculate the value at which stamp duty is payable on purchase of property.
Step 1 – Check the built up area of the property, its other features like floor, amenities, age of construction and plot area. Built up area is regarded as the higher of 1.2 times the carpet area of the flat and the actual built up area if the same is mentioned in the property documents
Step 2 – Select the applicable property type from among all the listed property types (e.g., is the property a flat or a plot or a house or a builder floor or a shop or a commercial unit)
Step 3 – Select the locality or area where the property is located from the classification available on registrar office website https://www.e-stampdutyreadyreckoner.com/
Step 4 – Calculate the minimum assessed value as per current ready reckoner rate as below:
|Residential apartments||For builder flats and resale apartments in group housing societies, sum of:
· Built up area of flat in square meter multiplied by applicable circle rate for flats in Rs. per per square meter * (1 + floor rise)
· Number of open car parking slots * 40% of the ready reckoner rate of developed land in that zone
· Number of covered car parking slots * 25% of the ready reckoner rate per unit area applicable for the property
|House Constructed on Plot||Sum of:
· Area of plot in square meter multiplied by applicable ready reckoner rate for flats in that area in Rs. per square meter multiplied by 1.25