5 Things that will instantly reduce Property Costs

Brainstorming on some of the major issues that are currently dogging the Indian real estate sector, realty experts zeroed on five major things that will help reduce property costs to a large extent.  These suggestions were brought to the fore during a Boardroom Discussion organised by commonfloor.com in Bengaluru recently.

Let’s have a look.

1. Reducing Multiple Taxes

It is obvious that, when the developers are enforced to pay huge amount of taxes, the pressure indirectly comes to the consumers. Explaining the same, Praveen Kumar, COO – Commercial & Retail, BREN Corporation, said, “Presently, there are multiple taxes, both direct and indirect, that home buyers need to pay to the government. In order to bring down property costs, a major initiative by the government by way of either reducing or doing away with certain taxes will be the right step forward.”

He further added that “certain taxes levied on developers must also be looked upon so that we can ultimately pass on those benefits to the consumers in the form of lower prices.”

2. Involve Stakeholders while deciding Guidance Value

Today, guidance value are increased arbitrarily without any consensus from the industry stakeholders.  And this increase directly results in higher property cost. Taking an example of Devanahalli, Irshad Ahmed, President, Irshads Property Matters explained, “Due to increase in guidance values, few properties in Devanahalli were selling at a price of Rs 7,000 per sq. ft.” Looking at the infrastructure of the place, these values are not at all justified.

Thus, government should form a panel involving all the stakeholders in order to arrive at a right guidance value.

3. Stable tax regime

It is not just the guidance value and the land acquisition, rather the discrepancies existing between various states in terms of stamp duty and registration too. Sanjay Ramanujam, CEO, BCIL avers that, “It is important to have a stable low tax regime, particularly in the area of service taxes and in terms of registration and stamp duty.”

We have inconsistencies existing between the various states across the country, for instance; Tamil Nadu, today has almost a rate of 8 per cent for registration and stamp duty, which is relatively higher and shores up as a serious deterrent for catalysing home demand.

4. Proper Regulatory Policy Framework 

Kumar further stated that, “ If the government gives some kind of incentives to the real estate industry in terms of easing out on the regulatory policy frame work, the approval process, the guidance value and makes land acquisition little cheaper, than the benefits will automatically pass on to the consumers.”

Bringing another important point to the table, P.K Mishra, VP Procurement, Salarpuria Sattva Group, opined that, red tapism needs to be addressed seriously as it will give a boost to the developers to complete the construction on time, which in turn will result in lowered property cost.”

5. Lowering Land Acquisition Cost

“If acquisition of properties are bit streamlined for the developers, benefits are bound come to the buyers,” said Irshad Ahmed, President, Irshads Property Matters. Thus, it gives us a clear view that, if a developer is granted with a reduced cost for acquiring land, the price of the projects will automatically come down. And as a result the developer will keep the margin of the profit and pass on the benefits to the consumer.”