Apartment costs zoom under new valuation: CREDAI members

CHENNAI: Debunking the claims of State government that the spike in the composite value for registration of apartments would benefit homebuyers, Confederation of Real Estate Developers’ Associations of India (Credai) said that the move has burdened homebuyers and would result in the downfall of the real estate industry.

“After a slump, the real estate industry has started recovering just now. Due to the increase in composite value, homebuyers will be affected first. If the values are reduced, it will benefit homebuyers, industry and the government,” S Sivagurunathan, president, Credai-Chennai, told the press.

He added that the State government had tried to emulate a system practiced in Karnataka but there were a lot of confusion in the composite valuation adopted by Tamil Nadu. “Any decision should be taken after consultation with the industry representatives,” he pointed out.

The State government issued a GO to implement a single agreement system with composite valuation methodology for apartments from December 1. As per the order, composite valuation rates (registration charges) have been fixed as 6% cent for apartments below Rs 50 lakh and 7% for apartment between Rs 50 lakh and Rs 3 crore. For apartments exceeding Rs 3 crore, 9% composite value will be levied.

Even though the composite valuation rates are lower than the rates followed in April, Credai points out that increase in composite guideline value nullifies the benefit of reduced rates. In other words, buying an apartment in December is costlier than buying one in April.

Meanwhile, S Sridharan, vice president, Credai National-South Zone, said that the number of registrations in TN was lesser in December after the new system came into effect on December 1. “We’re requesting the government to fix registration charges as 4% for the affordable housing category and 5% for all other categories,” he said.

L Shanthakumar, RERA-CMDA committee member, Builders Association of India, revealed that homebuyers have to pay Rs 20-22 lakh as taxes while purchasing an apartment worth Rs 1 crore. “Moreover, the composite guideline values fixed by the government are higher than the market rate. In a locality where the market rate is Rs 8,000 per sqft, the government is asking us to sell it for Rs 12,000 per sqft. This will increase the overall cost and registration charges,” he explained.

As per Credai calculations, an apartment worth Rs 44.10 lakh in Poonamallee would cost Rs 45.38 lakh (including registration charges of Rs 1.35 lakh) before April. But after December, the same apartment would cost around Rs 47.01 lakh, including registration charges of Rs 2.91 lakh.

For an apartment worth Rs 2.59 crore in Ashok Nagar, buyers paid Rs 8.07 lakh registration charges in April, and around Rs 18.17 lakh in December. Similarly, to buy an apartment worth Rs 4.36 crore in Teynampet, buyers would have paid registration charge of Rs 39.24 lakh in December, which would have been Rs 15.77 lakh in April.

The Confederation also urged the government to work collaboratively with stakeholders to develop a more efficient and equitable system apart from reconsidering the current composite valuation methodology.