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Taxation

Realty check: jacking up property rates bad for sales

Tuesday, 22 September 2009 11:19 administrator
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Indian Express 22.09.2009

Realty check: jacking up property rates bad for sales

Developers who have been hiking rates of apartments hoping to cash in on the demand have lost out — as far as sale in the second quarter of 2009 is concerne— to those who held on to reasonable prices.

The average price of housing stock unsold in the second quarter of 2009 was 56 per cent higher than the average price of apartments sold. The average price of the net residential sales in the Mumbai Metropolitan Region (MMR) between April and June is Rs 3,438 per sq-ft, while the average price of the net unsold property for the same period is Rs 5,356 per sq-ft, according to findings of the second quarter assessment of the realty market by the real estate research agency Liases Foras.

The figures show few takers for higher priced properties across MMR.

Of the total 83,000 flats available in this three-month period, a whopping 78% (65,000 flats) remained unsold. For the average homebuyer this market trend would mean a further fall in property rates post Diwali.

The report states that an increase in prices by developers when the market is just beginning to stabilise will do the market no good. Noting that even properties at mass housing locations like Thane and Mira Road have jacked-up rates, the report says, “This augurs the possibility of a slowdown in coming quarters or further correction in prices”.

Sounding a word of caution for developers, Mahesh Mudda, chairman, Builders Association of India, says only genuinely priced properties will have buyers during Diwali season. “At various foras of our organisation or the Maharashtra Chamber of Housing Industry or the Confederation of Indian Industry, we have been telling our people to understand the possible negative impact of their behaviour on the overall market at a time when the situation is beginning to improve. Maybe the slow intake of highly priced properties during Diwali will force them to adopt a more reasonable pricing,” said Mudda.

Raminder Grover, CEO of Homebay Residential, the residential arm of Jones Lang LaSalle Meghraj added that over the last few months, absorption has been the most in the mid-housing segment. “The phenomenon of developers hiking their prices in the range of 5% to 15% is seen in Mumbai, Delhi and other parts of the country. However if they don’t exercise caution and hike it too high, it would result in no absorption,” said Grover.

Last Updated on Tuesday, 22 September 2009 11:22
 

New property tax rate may be approved next month

Tuesday, 22 September 2009 01:23 administrator
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The Hindu 22.09.2009

New property tax rate may be approved next month

 

Staff Correspondent

The prevailing rate of tax under SAS is 2 per cent

 

The issue is said to have been discussed with officers concerned

Commercial, non-residential buildings to be divided into 11 categories

MANGALORE: Mayor M. Shankar Bhat is hopeful of getting the State Government’s approval for the property taxes, which were revised by the council of the Mangalore City Corporation under the self assessment scheme (SAS), by mid-October.

The council of the civic body in its June 30, 2009 meeting revised the tax rates (stated as per cent of the capital value) under the self-assessment tax, implemented by the then administrator of the corporation on April 1, 2008.

Meeting

Mr. Bhat told The Hindu that he, along with V. Ponnuraj, Deputy Commissioner of Dakshina Kannada, and K.N. Vijayaprakash, Commissioner of the corporation, had attended a meeting with Javed Akhtar, Secretary, Department of Urban Development, in Bangalore on September 16 to discuss various matters concerning the civic body. The matters related to the SAS were also discussed during that meeting, he added.

Stating that certain aspects related to the revision had been clarified to the Secretary, Mr. Bhat said that the department would soon be placing the proposal before Cabinet for approval.

It was likely to be placed in the next Cabinet meeting, he added. “I am hopeful that the Government will approve the revised rates by mid-October,” the Mayor said.

While revising the tax rate for commercial and non-residential buildings, the council had reduced the rate from the present 2 per cent to a minimum of 0.5 per cent and a maximum of 1.5 per cent.

The prevailing rate is 2 per cent across the board.

As per the revised rates, the property tax for commercial and non-residential buildings will be divided into 11 categories, based on the purpose for which the buildings are meant to be used. Different rates have been proposed for each floor of multi-storied buildings.

Residential buildings

The tax rate for residential buildings now stands at 0.6 per cent across the board. There is no minimum or maximum rate.

Minimum rate

The council has revised it to a minimum of 0.3 per cent and a maximum of 0.8 per cent, depending on the plinth area. The proposed rates are: 0.3 per cent up to 500 sq. ft. area; 0.4 per cent between 500 sq. ft. and 1,000 sq. ft.; 0.5 per cent from 1,000 sq. ft. to 2,000 sq. ft.; 0.6 per cent between 2,000 sq. ft. and 3,000 sq. ft.; 0.7 per cent from 3,000 sq. ft. to 4,000 sq. ft.; and 0.8 per cent for about 4,000 sq. ft.

Vacant sites

Vacant sites have been divided into three categories. They are: totally residential locality; high-density commercial locality; and medium density commercial locality.

The tax rate for vacant sites measuring up to 25 cents of land in a residential locality has been fixed at 0.1 per cent. It will be 0.15 per cent in medium-density commercial locality; and 0.2 per cent in high density commercial locality.

Owners of vacant sites of more than 25 cents will have to pay 0.1 per cent to 0.2 per cent for the first 25 cents of land, depending on the density of the locality. For the rest of the area, they will be charged at 0.01 per cent to 0.1 per cent.

Minister’s visit

The Mayor said that Minister for Urban Local Bodies S. Suresh Kumar was scheduled to visit Mangalore on Friday.

Last Updated on Tuesday, 22 September 2009 01:24
 

LDA sends a proposal to LMC

Monday, 21 September 2009 16:03 administrator
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The Times of India 21.09.2009

LDA sends a proposal to LMC

TNN 21 September 2009, 03:20am IST

LUCKNOW: In a glaring example of lack of coordination between the two departments, the Lucknow Development Authority (LDA) mooted a proposal which has already been implemented by Lucknow Municipal Corporation (LMC). The proposal in question is that of imposition of property tax on vacant plots.

The proposal was sent to the department of urban development, only to find its way to a dustbin. In fact, the officials in the department were left puzzled after they got it checked from the municipal corporation.

While LDA vice-chairman, Mukesh Meshram was not available for comments, a senior official said that the proposal was sent with an idea to provide a source of income to municipal bodies which otherwise nag while a colony is handed over to them by development authority.

Principal secretary, urban development, Alok Ranjan confirmed that the idea has been overlooked. "I did receive a letter from the LDA V-C seeking imposition of the said tax on vacant plots. But the LMC is already recovering the said tax. So we overlooked the proposal,'' he said, while talking to TOI on Sunday evening.

A senior official in LMC said that they have been recovering the tax for quite some time. According to LMC rules, the tax is imposed on all vacant plots and is "as reasonable as'' 10 paise per square feet per annum. That is, if one owns a plot of size 1,000 square feet, the owner is required to pay only Rs 100 per annum. "But even that sometimes is unacceptable to people,'' said an LMC official.

Officials said that the tax is categorised on the basis of location, just like house tax. The maximum limit being 25 paise per square feet. "The value is too small to be noticed, officials of LDA perhaps skipped it,'' said the official, jokingly.

Interestingly, LDA also mooted an idea to do away with the Chawkidari Tax sometimes back. But that too was not accepted by the state government, LDA sources said. The tax therefore, continues to be slapped on the plot owners.
 
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