Maharashtra discontinues stamp duty rebate; developers disappointed

Mumbai Metropolitan Region developers expressed their disappointment after Maharashtra government refused to extend the ongoing 2 per cent stamp duty rebate on property registrations valid till March 31, 2021

Chief Minister Uddhav Thackeray, Deputy Chief Minister Ajit Pawar, and Revenue Minister Balasaheb Thorat met on Wednesday to review the decision. CREDAI MCHI, which represents over 1,800 developers from MMR, had submitted a memorandum to Thorat last week seeking an extension of the 2 per cent stamp duty cut by another 12 months as it would help not only the real estate sector, but provide impetus to the economic recovery since more than 250 allied industries are linked with the construction sector.

Though the government refused to extend the stamp duty rebate, it agreed to the developer’s demand to keep the Ready Reckoner rates unchanged for 2021-22. It also decided to continue to the 1 per cent stamp duty rebate for women property owners aimed at encouraging women to be co-owners in family property assets. The government resolution issued by the government laid down a condition that women who take the benefit of the stamp duty rebate cannot transfer the property to male co-owners for 15 years.   

Commenting on Maharashtra goverment's decision about non extension of reduced stamp duty and unchanged ready reckoner rates, Dr Niranjan Hiranandani - MD- Hiranandani Group and National President- National Real Estate Development Council (NAREDCO) said, "Maharashtra government has played a leadership role in rolling out revolutionary measures like stamp duty reduction to augment sluggish real estate market post-Covid pandemic crisis. The extension of this benefit would have played a catalytic role in keeping up the pace of sales and property registration momentum across the micro markets and different housing segments in the state.”

Hiranandani pointed out that the stamp duty rebate had also resulted in increased revenues for the government. “The proven data clearly reflected uptick in volume leading to increased state revenue in second half of FY20-21 and multiplier effect it draws on employment and GDP. Unchanged ready reckoner rates is good, but Industry expected reduction in ready reckoner rates to foster real estate transactions. Hence, NAREDCO requests the state government to kindly reconsider the decision, proving it to be a win-win situation for all." Last year, the Maha Vikas Aghadi government had reduced the ready reckoner rates marginally for Mumbai with little impact on market rates.

Reacting to the developments, Deepak Goradia, President, CREDAI MCHI said, “We are disappointed with the Maharashtra Government’s decision to not extend the stamp duty rebate beyond March 31. Given the current economic climate, the reduction in stamp duty charges not just galvanized homebuyer sentiments, but also enabled the industry to spearhead the state’s economic revival in the post-covid era as well. An extension would have ensured the sustenance of the sales momentum while providing the necessary support to one of the strongest economic pillars and employment generators in the country.”

Goradia said the industry would continue to look forward in continuing the dialogue with the government and make representations to convince the government to to resume the reduced 3 per cent stamp duty rates in the near future

“We are glad that the State Government decided on keeping the ready reckoner unchanged which reflects the market conditions more precisely. The move to provide a 1% stamp duty rebate to women homebuyers is also noteworthy and honours the crucial role and contribution of women towards homebuying,” he said.

The bold step by the Maharashtra government to cut stamp duty rates by 3 per cent till December 31, 2020, and by 2 per cent till March 31, 2021 had reignited the demand for homes that had touch its lowest point in April at the peak of the COVID-19 national lockdown. Maharashtra’s policy initiative was followed by neighbouring Karnataka too. Most developers were in favour of the government continuing with the stamp duty rebate.

Rohit Poddar, Managing Director, Poddar Housing and Development Ltd said “The stamp duty reduction has spurred the sales and registration in Maharashtra to an all-time high, assisting the government in generating more revenue than the actual rates would have yielded. To sustain the momentum, it is essential for the government to extend the stamp duty reduction till March 2022 which in turn would help in generating even more revenue while de-stressing the real estate sector, thereby bringing the economy back on the growth track at high pace.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Secretary, CREDAI MCHI said "The State Government's decision to discontinue the stamp duty benefit will be a huge distress for the homebuyers who would have decided to buy their dream home but couldn't do so because of the severe impact of the pandemic. We had requested the Government to extend the stamp duty benefit for atleast a year so that more and more buyers could fulfill their wish of buying their home. We will continue to urge the Government to reconsider their decision and extend the stamp duty benefit further in interest of the homebuyers."

According to international property consultants Knight Frank India, after the stamp duty rebate was announced on August 26, the property registrations have grown incrementally month on month with a staggering 75,688 units registered between September 1, 2020 and March 24, 2021. Home sales achieved its highest ever mark in December 2020 with 19,581 units registered, and a 111 per cent increase over December 2019 registrations. In the run-up to March 31 deadline, the Inspector General of Registrations had clocked nearly 17,000 registrations in March, an increase of 234 per cent over March 2020.  

The Knight Frank India report also pointed out that from September 1, 2020 till March last week, the city exchequer had collected Rs 2578 crore in revenue from apartment sales which was a substantial increase over Rs 1756 crore worth revenue collected between January to August 2020 period.  

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “The reduction in stamp duty rate has helped mitigate the pain in the long-beleaguered real estate sector of Mumbai. As expected, with the revival of the economy, the sales momentum grew stronger in Q1 2021 and the euphoria amongst homebuyers continued despite the 100-bps increase in stamp duty rates. A combination of lowest home loan rates, reduced house prices along with rebates and payment flexibility offered by developers, as well as increased household saving rates, have provided the right growth environment for the residential segment to grow.” 

132 killed in 5 fatal accidents in 2020: IATA Safety Report

 

The total number of aircraft accidents decreased from 52 in 2019 to 38 in 2020, and the fatal accidents declined from 8 in 2019 to 5 in 2020, revealed the 2020 Safety Report released by Montreal-based International Air Transport Association (IATA), which represents over 280 commercial airlines worldwide.

 

The eight fatal accidents in 2019 had claimed 240 lives. In 2020, three accidents were reported with jet airliners and two with turboprops killing 132 people, the report said. In May 2020, Pakistan International Airlines flight PK8303 from Lahore to Karachi had crashed shortly before it could land at Karachi airport killing 97 out of the 99 people on board including 8 crew members. Only two passengers, a bank executive, and a mechanical engineer on board the Airbus A320 survived the crash. 

 

The second biggest accident was reported in India. In August 2020, an Air India Express Boeing 737 from Dubai to Kozhikode skidded off the runway after landing on the table top runway, killing 21 people including both the pilots.

“On 8 January 2020, the world experienced a shocking tragedy with the shooting down of Ukrainian International Airlines Flight 752, minutes after takeoff from Tehran Imam Khomeini International Airport. All 176 people on board perished. Similar to MH17, this is another tragic example of what can go wrong around conflict zones. The incident is considered an unlawful act and is, therefore, included in aviation security statistics and not in this report,” the executive summary of the report said.

 

The accident categories in 2020 listed in order of the number of fatalities were:

• In-flight Damage (2) with 104 fatalities

• Runway/Taxiway Excursion (2) with 24 fatalities

• Controlled Flight into Terrain (1) with 4 fatalities

 

The top five accident categories in 2020 listed by the frequency of accidents (including the ones with fatalities) were:

• Runway/Taxiway Excursion (9)

• Hard Landing (7)\

• Gear-up Landing/Gear Collapse (6)

• In-flight Damage (5)

• Ground Damage (3)

 

With COVID-19 pandemic severely impacting the normal commercial flight operations, the accident rate has shown an increase. The accident rate increased from 1.11 accidents per million flights in 2019 to 1.71 accidents per million flights in the COVID-19 pandemic year though total flight operations in 2020 reduced by 53 per cent, the report said.

 

 

 “Flying is safe, although the industry did take a step back on performance in 2020. The severe reduction in flight numbers magnified the impact of each accident when we calculate rates. But numbers don’t lie, and we will not allow this to become a trend. We will have even sharper focus on safety during this period of reduced operations and as flight schedules are rebuilt when the world reopens,” said Alexandre de Juniac, IATA’s Director General and CEO.

 

For the first time in more than 15 years there were no Loss of Control Inflight (LOC-I) accidents, which have accounted for the largest share of fatalities since 2016. “The lack of any such events in 2020 was a positive development. Nevertheless, based on the initial reports from the investigation into the tragic loss of Sriwijaya Air SJ 182 early in 2021, we must continue to learn and improve,” said de Juniac.

 

 

Residential home sales recover by 90 per cent in Q1, 2021: JLL report

 Residential home sales in the first quarter of 2021 have recovered by over 90 per cent of the pre-COVID levels across top seven cities and new launches witnessed a 27 per cent jump over Q4 2020, according to JLL Residential Market Update - Q1 2021 research report.

The report said 25,583 residential units were sold in Jan-March quarter of 2021 compared to 27,451 units sold in Jan-March quarter of 2020. Mumbai showed a recovery of 84 per cent compared to pre-COVID levels with 5,779 units sold in this quarter compared to 6,857 in Q1 of 2020. Neighbouring Pune, however, has recovered fully and clocked 3,745 unit sales in this quarter compared to 3,728 units sold in Q1 2020.

Barring National Capital Region and Bengaluru which 92 per cent and 57 per cent recovery compared to pre-COVID levels, Chennai, Hyderabad and Kolkata showed Pune-like over 100 per cent recovery, the report said. 

Sales volume increased across most markets

	Q2 2020 (in units)	Q3 2020 (in units)	Q4 2020 (in units)	Q1 2021 (in units)	Growth (%) Q1 2021 over Q4 2020
Bengaluru	1,977	1,742	2,535	2,382	-6%
Chennai	460	1,570	2,500	3,200	28%
Delhi NCR	2,250	3,112	4,440	5,448	23%
Hyderabad	1,207	2,122	3,570	3,709	4%
Kolkata	481	390	438	1,320	201%
Mumbai	3,527	4,135	5,026	5,779	15%
Pune	851	1,344	3,323	3,745	13%
Total	10,753	14,415	21,832	25,583	17%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

 

“The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. This has been on the back of historically low home loan interest rates, stagnant residential prices, lucrative payment plans and  freebies from developers and government incentives such as the reduction of stamp duty in states like Maharashtra and Karnataka (for affordable housing). The ease of lockdown restrictions and the commencement of the vaccination drive have further aided in bringing buyers back to the market,” said Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL.

“In the fourth quarter of calendar year 2020, India’s economy returned to growth territory, recording a 0.4% rise in GDP. In tandem with the GDP growth, the pace of recovery in the residential market intensified with sales increasing by 51% when compared to the previous quarter. In Q1 2021, sales of residential units continued an upward trajectory. Sales, at the overall level, increased by 17% on a sequential basis,” he added.

Delhi NCR witnessed the maximum new launches jumping up from 699 units in Q3 of 2020 to 2,244 in Q4 and 4,734 units in Q1 of 2021, an increase of 111 per cent. Mumbai, which not only enjoys the 2 per cent stamp duty rebate but also 50 per cent reduction in premium costs announced by the Brihanmumbai Municipal Corporation, also saw new launches jump from 2,294 units in Q2 of 2020 to 4,616 units in Q1 of 2021, a jump of 43 per cent over last quarter. Pune also witnessed a 57 per cent increase in new launches. Across seven cities, the new launches shot up from 14,780 in Q2 of 2020 to 33,953 units in Q1 2021. The focus in new launches remained squarely on affordable housing with 69 per cent of the new launches in the sub Rs 1 crore category homes, the report said.

“The Government is committed to boost affordable housing. The recent Union Budget has extended the benefit of additional interest deduction on home loans for first-time homebuyers in the affordable segment. Further, there is a time extension to claim the tax holiday on profits from affordable housing projects until March 2022. The housing loan going below 7% for the first time in the last decade also triggered sales in all segments in the residential real estate. The buoyancy in the market manifested in the form of low mortgage rates and stable prices are expected to continue and attract fence-sitters and serious end users,” said Siva Krishnan, Managing Director, Residential Services (India), JLL

The report pointed out that the COVID-19 pandemic has decisively shifted the home buyer’s focus in favour of established developers. Cautious home buyers are giving increase preference to developers with sound execution capability, transparent business operations and offering quality products.

The report said the residential market will continue to be a “buyer’s market”. Though home prices have remained largely stagnant across all seven cities, in some markets, developers continue to offer attractive freebies like stamp duty rebate, no EMIs for 12 months and payment schemes to woo the fence-sitters into the buying decision.

 

MMR developers want stamp duty rebate to continue for one year

Mumbai developers, who tasted the impetus their home sales received after the 3 per cent stamp duty cut, have demanded that Maharashtra government extend the rebate ending on March 31, 2021 by another 12 months.

CREDAI-MCHI, which represents over 1,800 developers in Mumbai Metropolitan Region, made this demand in a letter handed to Maharashtra revenue minister and Congress leader Balasaheb Thorat recently.

The letter pointed out that the stamp duty rebate had not only substantially improved home buyer sentiments and property registrations since August 2020, but also increased the tax collections for the state due to high volume of home sales and contributed to job creation. The stamp duty was cut from 5 per cent to 2 per cent from Sept 1 till December 31, 2020, and then increased to 3 per cent from January 1 to March 31, 2021. The rebate has created positive cascading effect enabling the real estate industry to led the revival of the COVID-19 pandemic impacted economy, the letter said.

Acknowledging the support of the government in this recovery, CREDAI-MCHI said extension of the rebate till March 31, 2022 will further help sustain sales momentum that has led to record breaking property registrations and help the recovery.

Deepak Goradia, President, CREDAI MCHI, lauded the decisive and forward looking approach taken by the revenue minister. “We have requested the Maharashtra government to grant an extension of the stamp duty rebate for another 12 months to sustain the momentum and continuing the positive cycle of investment.” He said over 250 ancillary industries are directly and indirectly dependent on the industry and such a rebate would lead to further job creation and overall economic revival.

After the 3 per cent stamp duty cut was implemented, the property registrations shot up gradually to record breaking levels.   September 2020 witnessed registration of 5,597 properties, followed by 7,929 registrations in October, 9,301 registrations in November, and 19,584 registrations in December. While stamp duty increased by 1 per cent from January 1, the sales momentum continued with January logging 10,412 registration and February clocking 10,170 registations, according to the Inspector Generation of Registrations data.

The total value of properties sold also increased to never-before levels with September (Rs 9,025 crore), October (Rs 11,640 crore), November (Rs 14,395 crore) December (Rs 34,025 crore), January (Rs 10,170 crore) and February (Rs 11,745 crore), according to a Propstack report. Multiple factors including pent-up demand, lowest home loan rates, substantial savings in stamp duty for higher priced inventory, and discounts offered by developers contributed to the sales momentum.