Some recent great news for property in Gurgaon may lead the Millennium City’s real estate market out of the funk it has been in over the past few years. It turns out that the concerned government department has proposed to reduce the circle rates in the city by up to 15 percent. Such a move is likely to have a huge impact on real estate in Gurgaon and benefits both homebuyers as well as the government. Buyers who are keen to purchase flats in Gurgaon may now need to pay a lower sum to purchase their dream home and builders in Gurgaon too stand to gain as lower circle rates or collector rates as they are also known will help developers offload existing inventory in the city.
Circle or Collector rates are defined by a government authority and state the minimum price at which an apartment, a plot, a built up house or a commercial property can be sold or transferred. In addition, buyers are required to pay a stamp duty and registration charges on the property they own the value of which cannot be lower than the fixed circle rates. The lowering of circle rates by the district administration is almost certain to give real estate in Gurgaon a much needed shot in the arm and lead to higher sales not only of new projects in Gurgaon but also of commercial property in the city.
In addition, such a move is likely to lead to a greater and regular stream of revenue accruing to the government as a lowering of circle rates in Gurgaon is likely to lead to owners of property in Gurgaon, who have till date been reticent to register their properties due to a high stamp duty and a capital gain tax resulting from an appreciation in the value of a property, to now strongly reconsider and register their property in Gurgaon. The larger number of properties in Gurgaon that will now be registered will lead to a flow of money into government coffers and hence the lowering of circle rates shall benefit nearly all concerned, whether it be real estate developers in Gurgaon, individuals with flats or property in the city or the government.
Why the reason for such a wise consideration by the government at such a late stage when the value of most projects in Gurgaon has steadily been sliding over the past few years? The reason is simply due to the irrelevancy of circle rates in many parts of Gurgaon where such rates were higher than the value of the land to which they were tied. Furthermore, despite the fall in the price of property in Gurgaon over the past few years the gulf between the circle rates and the transaction value of property in Gurgaon is still inefficient and a significant deterrent leading to a poor market sentiment, hence the lowering of circle rates in the city is expected to lead to a lower price for plots in Gurgaon as well as unsold inventory in the city
The greatest beneficiaries of such a move are likely to be those homebuyers who purchased a property in Gurgaon later than April of this year as the revised circle rates are likely to be applicable to property bought or sold after this period.