States devise new methods, as property registrations drop amid COVID-19

[ecis2016.org] We take a look at how states are coping with a drop in property registrations amid COVID-19

The Coronavirus pandemic seems to have caused major dents in the coffers of stamps and registration departments across major Indian residential markets. As India entered into phased lockdowns starting March 25, 2020, to stop the spread of the deadly virus, property registrations were suspended, resulting in huge losses to states, for which stamp duty on real estate is a major source of revenue.

You are reading: States devise new methods, as property registrations drop amid COVID-19

Recall here that property registrations across the country were suspended on March 25 and the full-fledged work resumed only on May 30, 2020.

Stamp duty is a percentage of the transaction value, which buyers have to pay to the registration department in the city to get the property registered in their name. These charges vary across states. Additionally, buyers also have to pay 1% of the deal value as registration charges.

COVID-19 impact on stamp duty collection

In Mumbai, the most expensive Indian realty market, a total of 1,642 registrations between May and June, 2020 helped the stamp duty department earn Rs 176 crores.

Read also : Top 10 popular localities for real estate in Kolkata

On the other hand, the income of the Maharashtra government in April and the first 10 days of May, when the lockdown was in place, was Rs 15 crores as against Rs 4,000 crores it usually generates in this period, primarily on account of capital-intensive transactions in expensive markets of Mumbai and Pune. The Maharashtra government’s decision to reduce stamp duty by 1% in March 2020, from 6% to 5%, failed to encourage buyers to come out as fear and anxiety levels overwhelmed buyers amid the state recording the highest number of COVID-19 infections.

[ecis2016.org] Maharashtra may cut stamp duty by 3%, as property registrations drop amid the COVID-19 pandemic

The state has now developed a system, enabling builders to register properties online, without having to visit the sub-registrar’s office. This option will be available only in cases where the transaction is taking place between a builder and the first buyer.

In Haryana, the state has pegged a revenue loss of over Rs 4,000 crores, as a fallout of the suspension of the activity. Haryana, which is home to some of the most active real estate markets in the country, including Gurugram, Manesar and Faridabad, typically earns over Rs 500 crores in a month through property registrations.

In Karnataka, about 8,000 flats were registered between April and May 2020, helping the state earn Rs 398 crores. In June, when the travel restrictions were lifted, the state earned Rs 746 crores, in stamp duty on property registrations. Recall here that the Karnataka government, in May 2020, lowered the stamp duty on properties worth between Rs 21 lakhs and Rs 35 lakhs to 3% from the previous 5%, with an aim to boost buyer sentiment. Similarly, stamp duty on purchase of properties that cost less than Rs 20 lakhs, was reduced to 2%.

Numbers available with the stamps and registration department show that only 3,000 property registrations were recorded in Noida between May and June, 2020.  In the same period last year, 24,000 properties were registered. From these 3,000 registrations, the department earned Rs 60 crores as revenue. When it was business as usual, the department earned anywhere between Rs 150 crores and Rs 180 crores revenue in a month.

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Owing to the fear and anxiety involving the Coronavirus spread, property registrations remain low, even after the country started gradually unlocking itself since May 30, after a prolonged lockdown that lasted nearly two months.

[ecis2016.org] Stamp duty in key tier-2 cities in India

Can property registration be completed online?

Even though several states have developed infrastructure that allows buyers to complete a major part of the property registration process online, for the process to be completed, all the parties concerned have to visit the sub-registrar’s office at a pre-appointed time. This is the time when the buyer, the seller and the witnesses have to provide their signatures and thumb impressions, apart from the biometric identification.

In case you are buying a property through a developer, you may avoid this process but you would still have to visit the builder’s office to complete the formalities, as is the case in Maharashtra now.

In April, West Bengal started online registration of properties. The state was the first in India to put the biometric process on hold and issue provisional registration certificates. Once the situation normalises, buyers can visit the sub-registrar’s office and get the biometric identification done and get the final registration certificate.

In order to maintain social distancing and safety, sub-registrar’s offices across the country have put a check on the number of people that can be present in the premises, to get a property registered. In Noida, for example, not more than five people can visit the sub-registrar’s office for the registration. Everyone visiting the offices have to wear masks and sanitise their hands before entering the premises. Since these are some of the most crowded offices, the premises are also being sanitised frequently to maintain safety.

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Category: Lifestyle