Post demonetisation blues? Finally, real estate starts bleeding

According to experts, with polls around the corner, most people are holding on to properties. Representation pic

Demonetisation has impacted every sector of the economy so it is only fair that the stamp duty and registration office - one of the major revenue generators for the state exchequer - also finds itself in some dire straits. Before the bombshell policy decision, the whopping target set for this financial year was Rs 23,548 crore as compared to last year's collection of Rs 21,767 crore. But with less than three months in hand, the department is far from its goal as it has so far only collected Rs 14,869 crore (April to December 31), with Rs 8,679 crore nowhere in sight. Add to that the prospect of election in February, and the goal is near impossible.

Even more worrying, however, is that it is being observed that rather than finalizing deals, people re choosing the option of wait and watch and hold on to properties. Insiders say there may be no price hike in the ready reckoner rates.

Digital department
Speaking to mid-day from Pune, Inspector General of Stamps and Registration Ramaswamy N confirmed the target and the collection figures so far. However, striking an optimistic note, he added, "We have three more months to go, so hopefully, we should be able to reach somewhere closer to the set target."

When asked if he would attribute the low collection to demonetisation, Ramaswamy replied in negative and said, "Our department was the first to go digital in 2012 so we stopped dealing in cash. All stamp duty and registration payments across Maharashtra area done through e-payment, e-challans, etc."

Breaking down the numbers
But could there be a co-relation still? Let's look closer. Demonetisation was announced on November 8, 2016, and statistics show that between April 1, 2016 and November 8, 2016, around 7,721 properties were registered. Post-demonetisation, between November 9, 2016 and December 31, there is a dip of 27 percent. "Our average per day revenue collection prior to demonetisation was approximately Rs 58.30 crore, but post-demonetisation, it fell to an average of Rs 42 crore per day. We have to wait for the situation to come back to normal," said the IGR.

Expert speak
Real estate expert, advocate Sanjay Chaturvedi, is of the belief that if the real estate industry - especially in areas like Kandivli and Mulund - see corrections in the rate, the overall real estate industry could witness a correction of up to 20 per cent in the next few months. He said, "Demonetisation may be one of the reasons for the fall in revenue collection. The public is not expressing any interest in buying properties, as they are finding it difficult to even arrange for the marginal white payment."

Meanwhile, advocate Vinod Sampat, cited a different reason. "There is hardly any construction activity within Mumbai limits since the high court stay order that sought clarity from the BMC on disposal of waste management. No redevelopment projects are also taking off at present, making the situation a bit grim."

Mix responses to RR rate hike
However, while there are rumblings that there may be no change in the ready reckoner rates this year due to the already slow moving economy, others like Sampat are waiting to see what the update will be, saying it could be close to a hike of 15 per cent. According to him, the RR rates are specified area wise, but a large discrepancy is witnessed in the manner in which the market prices are calculated. But Chaturvedi, on the other hand, is of the opinion a rise in ready reckoner rates at this time may hurt public sentiments and even lead to a revolt, which the ruling government may not want to happen.

However, IGR Ramaswamy has only this to say, "We decide the rates on the basis of area wise property sales. We are still going through the voluminous data from April 1, 2016, and will decide on this year's rate only after that is done."