Data collected by Registration Dept. shows that stricter rules imposed last year didn’t hit apartment sales in state
Text Credit: The Times of India Featured image source: data1.ibtimes.co.in
Though the government hiked the registration fee and introduced new registration rules for properties with effect from July 2016, statistics showed that both factors hadn’t hit the sales of apartments much. There was an upward trend in the sale of apartments in the state after stricter rules were imposed.
Data available with the registration department showed that the total number of apartments registered in 2015-16 was 7,438 in Kerala. This figure increased to 8,039 in 2016-17. Registration department sources attributed this increase to the buoyancy in the real estate economy over the past one year and the entry of new builders in the market.
The growth, however, is not in tune with the expectations of industry leaders. The demonetisation exercise, announced in the first fortnight of November 2016, had its impact on sales in the past two quarters of the previous fiscal.
“Had the demonetisation move not affected the market, the number of registrations would have been much higher,“ sources said. While the trend shows only a minor increase in Ernakulam for 2016-17, the increase is remarkably high in Thiruvananthapuram and Kozhikode.
While the increase in number of apartments registered in Kozhikode in the previous financial year (compared to the year before) was 312, the corresponding figures for the capital district was 349. For Ernakulam, there has only been an increase of 12 registrations in 2016-17 as compared to the previous year.
Even in districts like Idukki and Wayanad ¬ where the rules are stricter owing to ecological issues ¬ the numbers showed a marginal increase. In Kasaragod ¬ where there was no registration of apartments from 2011-12 to 2015-16 ¬ 29 registrations were recorded in 2016-17.
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The registration of apartments in the state had reached its zenith in 2013-14 and 2014-15, when the stamp duty and registration fee were only 6% and 2% respectively. While the number of registrations of apartments was 9,913 in 2014-15, the corresponding number for 2013-14 was 9,293.
At the same time, in terms of value (of apartments) and revenue earned by the government from the transactions, the peak time was 2016-17. “The reason for the increase is obvious. While the land value and thereby the value of apartments increased, they could not be undervalued as the registration department had introduced a new rule that an independent valuation certificate ¬ by a certified evaluator ¬ should also be produced along with the registration document for registering the property, “ sources said.
The total value of apartment’s ¬ as declared in the registration documents in 2016-17 ¬ was Rs 2,622.08 crore. The revenue earned by the government in terms of stamp duty through registration of apartments in 2016-17 ¬ was Rs 166.5 crore, while it was Rs 52.2 crore through registration fee.
Statistics available with the department is something that will give confidence to builders who have been facing another crisis in the form of GST.\The slack phase is only temporary and the industry is hoping that it will regain the momentum soon.
Builders hopeful of growth in real estate sector
The prevailing scenario in Kochi’s realty sector does not present a pleasant picture. But, both builders and the registration department are hopeful that that situation would change in the coming months. The sector is expected to grow as builders come up with new projects targeting the salaried sections and high net worth individuals, including NRIs.Also, banks have reduced the interest rates on home loans.
Builders feel that the implementation of Real Estate (Regulation and Development) Act (RERA) will bring transparency and instil confidence in buyers. But, those who keep a close watch on developments in the sector, feel otherwise. “Even projects implemented by well-known builders get entangled in cases pertaining to violation of coastal regulation zone norms, Kerala Municipal Building Rules and the like,“ said advocate Jacob Mathew Manalil, who has fought cases against builders at the high court over fraud.
He said that state has not framed rules for RERA. Barring a few reputed builders, others have adopted a practice of diverting funds. “There are many instances of projects not completed on time. People do not have confidence to invest in apartment projects.The increasing number of cases registered against builders are a deterrent,“ he said, adding some of the clauses in RERA does not serve buyer interest.
“The act insists that developers have to deposit 70% of project money in a scheduled bank to cover land and construction cost. It does not say anything about remaining 30%,“ he said.
Document writers in Kochi feel that the sector is yet to recover from the lull.“Not many sales are happening and land value price of flats have not fallen,“ said document writer Prakash.
Desperate people sell their land flats, others adopt a wait-and-watch policy. The requirement that all transactions must be done through cheque and demand draft is another problem.
“It is a known fact that black money controlled the sector. Now, you see people buying villas and apartments from loans given by financial institutions.These people are cautious,“ he said.Brokers too indicated the difficulty in making cash transactions. “There are buyers who have ready cash and there are sellers who are willing to accept it.As not everyone trusts the other person, a deal is finalized only after many rounds of negotiations,“ said a broker.