TN Government’s Stamp Duty Hike Announcement Puts Strain on Home Buyers, Impacts Affordability and Accessibility of Housing
~ Increased Registration Charges to Impact Common Man and Further Delay Property Registrations ~
Chennai, July 18, 2023: “The recent announcements by the TN Government have impacted home buyers putting a strain on the affordability and accessibility of housing. On 8th of July, the State Government passed a new order increasing Stamp duty charges from a fixed amount to 1% of the market value of the property, while registration charges for construction agreements have increased from 1% to 3% effective immediately from 10th July 2023. This has compromised the affordability of new homes, impacting the state’s vision of “Homes for All”, said Mr S Sivagurunathan, President, CREDAI Chennai.
This sudden increase has created a significant financial burden for home buyers, forcing them to pay the additional amount from their own funds as leading banks are not prepared to provide immediate support for the increased registration charges. As a result, property registrations have been delayed, affecting both under-construction and ready-to-occupy projects.
The Real Estate sector in Tamil Nadu plays a vital role in the state’s economy, contributing to 23% of its GDP. It is projected that the Real Estate sector will touch USD 1 trillion by 2030 and contribute 13% to the country’s GDP by 2025.
Six Associations have jointly come together to highlight and address these issues the Government has imposed on the homebuyers of Tamil Nadu without any regard to their welfare and concerns.
“Our aim in addressing these issues to the media is to raise awareness and appeal to the respective authorities. We believe that a holistic approach and seeking public opinion before implementing such decisions would have been greatly appreciated. We call upon the Government to address the hardships faced by home buyers and take necessary steps to safeguard the affordability and accessibility of housing for the common citizens of Tamil Nadu. We have listed our appeals and are confident the Government will take necessary remedial measures, said Mr S Sivagurunathan, added.
The appeals are:
• To revisit the existing order on Stamp duty charges and Registration fees
• Propose a thorough review of the current fee structure while considering the concerns raised by Industry stakeholders.
• Ensure alignment with current market conditions and fair valuation
• Reduce the charges to a nominal level to alleviate the financial burden on Home Buyers
• Facilitate the redevelopment of apartments by providing favorable conditions for the common man
• Promote the growth of the real estate industry by encouraging new Home Buyers to invest in properties
• Create a conducive environment for the Real Estate market to flourish and contribute to the economy
“It is essential to ensure alignment with current market conditions and fair valuation. Reducing the charges to a nominal level will alleviate the financial burden on home buyers, promote the redevelopment of apartments, and encourage new home buyers to invest in properties. Creating a conducive environment for the real estate market to flourish will contribute to the growth of the economy,” Mr S Sridharan, Vice President, CREDAI National South Zone.
First-time home buyers, in particular, may face challenges due to this increase, affecting their purchasing power and ability to fulfill their dream of homeownership. An average middle-class family buying an apartment worth Rs 50 lakhs will now be required to pay an additional Rs 1 lakh. This increased cost will influence the decision-making process for prospective home buyers, hindering their ability to buy their dream homes.
“Redevelopment projects with multiple units will also be severely affected by this increase. The cost of registering the powers of attorney will increase significantly, leading to higher selling prices for buildings and putting additional financial pressure on home buyers, especially those from the middle-class and lower-middle-class segments,” said Mr A. N. Balaji, Chairman, Builders Association of India.
“The charges for Power of Attorney related to selling immovable property to non-family members have seen a substantial increase, with charges now set at 1% of the market value of the transaction. This escalation places an unreasonable burden on the common man without providing any value addition for the use of Power of Attorney,” pointed out Mr G. Mohan – President, Chennai Southern Builders Association.
“The Real Estate industry is already facing challenges due to demonetization effects, the impact of COVID-19, and the rise in guideline value. This announcement further adds to the existing difficulties and may lead to a decreased demand for properties, oversupply, and an economic setback for the state,” commented Mr N Hanifa, President, Singara Chennai Builders Association.
Other Association members also present at the media conference were Mr K K Thirumalai, President, Flat Promoters Association-Ambattur and Avadi, Mr D Chirstinpaul, President, Chennai Flat Promoters Association – North and Mr H. Robert Livingston, President, Flat Promoters Association-Chennai South.