Delhi Circle Rates may see hike: Buy Property Now!
Planning to buy a house in Delhi? If yes, do it before the Lok Sabha election results. In order to increase the revenue generation of the state, Delhi may witness about 20-30 per cent hike in circle rates across various categories of properties post-elections. This in turn is expected to increase the overall property values in the city.
First, let us understand what circle rates are? Introduced as recently as 2007, circle rate is a minimum rate of a plot, independent house, or flat in a particular area at which a property can be registered. The rates are decided by the state revenue ministry as the government gets revenue in the form of stamp duty.
But due to general sluggishness in the market, the revenue department collected much below what was expected. In the financial year 2013-14, the revenue target was Rs 3,800 crore. However, it could collect only Rs 3,000 crore.
Thus, post elections, as per the Delhi government’s Revenue Department report, up to 20-30 per cent hike was recommended for lower categories and a 40-50 per cent for A and B categories. However, across India, when compared to the actual market rates, the circle rates are much lower. For current rates in Delhi, consider the table below.
| Category | Rate (Rs per sq metre ) |
| A (Vasant Vihar, Jor Bagh, Golf Links, Anand Niketan, Friends Colony and Maharani Bagh) | Rs 6.45 lakh |
| B (Greater Kailash and Defence Colony) | Rs 2.05 lakh |
| C | Rs 1,33,200 |
| D | Rs 1,06,400 |
| E | Rs 58,400 |
| F | Rs 47,200 |
| G | Rs 38,500 |
| H | Rs 19,400 |
And when real estate sector is already going through a lull, was this increase really necessary as it will further increase the property values? Or, is it good as it will bring in the much needed transparency in the sector?
Well, Rohan Sharma, Senior Manager – Research & REIS, JLL India spoke to CommonFloor and said, “it has been argued that the increase in circle rates causes the rate of transactions to drop. Be that as it may, the gap between the circle rate and the market rate reduces and the proportion of genuine buyers with clear, accounted money entering into transactions increases. Though this may reduce transaction velocity, it also reduces the incidence of black money being parked into real estate assets.”
Thus, this process is significant when seen in the light of the Indian government’s drive towards curbing the incidence of black money and money laundering in real estate.
In terms of impact on home buyers, Kamal Batra, Chairman, Buniyad Group states, “property prices will increase for sure, but certain group of buyers who try to save during a transaction might avoid investing. So, there might be some more problems with demand in near future.” Also, there will be an additional burden on property buyers in terms of higher stamp duties, resulting in marginally higher transaction costs and overall cost of ownership.
But as every coin has two sides, this is no exception. The hike actually won’t affect people who conduct the entire transaction in white money. They can in fact easily avail higher loans for buying a house as bank disburse loans on the basis of sales deed, which in turn is based on the circle rates. Thus, it will significantly reduce the black-money component involved in buying and selling of properties.
Further, “higher revenue for the government means more funds available for support infrastructure development. Seen in this light, bringing region’s circle rates closer to or on par with its prevailing market rates is a positive process,” adds Sharma.
