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To rescue the real estate sector from the economic slump courtesy of the pandemic, the Delhi government recently announced a measure to cut the circle rates for all categories of properties for the next six months by 20%1. If you are someone who has been waiting for the right time to enter the real estate sector, read on to understand how this reduction is a golden opportunity for you to do so.
What is a circle rate?
A Circle rate in layman terms is a basic value set by the government at which you could sell, transfer or purchase any form of real estate such as plots, flats, houses, etc. This value tends to differ from locality to locality and is derived by the state revenue department and local development authorities after complex considerations and due diligence.
Alongside the circle rate which is set by the government, there is a market rate which is determined purely by the forces of perceived demand and supply for a particular piece of real estate. On most occasions, the market rate is usually higher than that of the circle rate set by the government since circle rates are not revised often enough by the government.
A list of revised circle rates for plots and apartments in Delhi is mentioned below. These rates would be effective after the official notification due by the government and will be effective till 30th September 20212. You could refer to the state government website to get an exact quote of your circle rate by using the circle rate calculator on the website.
Revised circle rates for plots2
|Category||Land Cost (per sq. meter)||Construction Cost : Residential (per sq. meter)|
|A||Rs. 6.19 lakhs||Rs. 17,568|
|B||Rs. 1.96 lakhs||Rs. 13,920|
|C||Rs. 1.28 lakhs||Rs. 11,136|
|D||Rs. 1.02 lakhs||Rs. 8,928|
|E||Rs. 56,064||Rs. 7,488|
|F||Rs. 45,312||Rs. 6,576|
|G||Rs. 36,960||Rs. 5,568|
|H||Rs. 18,624||Rs. 2,784|
Revised Circle Rates for Flats2
|Area||Private Builder Flats||DDA Society Flats|
|Multistorey flats||Rs. 87,840||Rs. 70,272|
|More than 100 square meters||Rs. 76,200||Rs. 60,960|
|50 to 100 square meters||Rs. 63,590||Rs. 52,992|
|30 to 50 square meters||Rs. 50,122||Rs. 43,584|
|Up to 30 square meters||Rs. 44,352||Rs. 40,320|
How will the revised circle rates benefit an investor?
If you are an investor who has been seeking a right entry point in real estate, Here is how the recent rate cut would benefit you.
According to a real estate expert3, there are some localities in Delhi where the circle rate is actually higher than the market rate due to the steep fall in demand during the pandemic. This has led to a stagnation of real estate transactions in certain localities and resulted in higher tax liabilities for both the buyer and the seller. Once the circle rates have been reduced, buyers and sellers would effectively be able to transact legally on the sale and purchase of real estate in the aforementioned areas that are estimated to boost the real estate economy in the region.
Secondly, when you register a property, you have to pay stamp duty charges. The reduction in circle rate will lead to lower stamp duty charges in case the property is getting registered. It is estimated that the 20% reduction in circle rates would reflect in a 1% decrease of stamp duty and registration charges1.
Lastly, if you are someone who is looking to take a home loan and build your dream house, a revised and lower gap between the circle rate and market rate will be beneficial since loans are given on the basis of sales deeds which are generally closer to the circle rates4. This would mean that it would be easier to finance your home now more than ever.
The recent cut in circle rates is being touted by experts as a big move that is expected to stimulate the real estate market and consequently boost revenue for the government substantially. As someone looking to invest in real estate or simply get a home for their family, this period is a golden opportunity to move ahead with your purchase. If you are worried about liquidity of funds at the moment and the financial distress associated with real estate investment, an array of Home Loans offered by Hero Housing Finance are there to help you ease your financial burden over a long tenure of up to 30 years5. You could also borrow money for the various other expenditures that arise in the process such as renovation to add value to your property when the time is right.5