Mumbai’s real estate market is in the doldrums. These are very unpredictable times. Mumbai’s real estate market could tank or shoot up due to the many opportunities that buyers might perceive. No matter what, there has to be a flurry of unthinkable measures to be taken by the government to boost Mumbai’s real estate market. This does not mean spending more money by giving out loans. The measures should be given as incentives to the buyer. It should enable the buyer to take that final leap and say it is now or never. These are important things which need to be implemented immediately to ensure a spurt in real estate.
1. Property Taxes
Any buyer who is purchasing a new construction property which is ready to move. He should get a 5 year moratorium on property taxes. He should be the first purchaser directly from the builder. This should reduce existing inventory which is unsold but ready to move. NO resale, no investor properties. This is what Philadelphia city had done during the 2008 housing collapse in the USA. They gave all new home buyers a 90% discount on their property taxes for 10 years. That gave a huge boost to under construction and newly constructed home which were lying empty.
2. Stamp Duty
Once again if a ready to move in property is purchased directly from the developer as first buyer then the stamp duty and registration charges should be reduced to half. For resale property the stamp duty should be reduced by 1%. Mumbai has 6% SD/Registration charges. This should be reduced dramatically. It incentivizes the buyer to go ahead and quickly register their property. Obviously this has to be time bound. Stamp duty charge is a huge revenue generated for the government.
GST is 12% on top of additional 6% stamp duty. So in Mumbai where real estate prices are through the roof, you pay 18% to the government. This is sometimes equal to buying another flat in a tier 2-tier3 city. It’s unheard off! If the developer opts for 5% then he doesn’t get any GST Setoff. That was a failed policy. Very few developers opted for this. Take a wild guess who lands up paying for all of these government expenses? Not the developer! GST charges on under construction homes have to be reduced by half. If not then get the stamp duty charges and GST charges under one roof. You simply cannot expect any buyer to pay 12% additional to the heavy burden he already has.
4. Cash (Most revolutionary, controversial & Hush Hush)
Give a One Time Free Pass to buy a property in cash. NO QUESTIONS ASKED!!! Let everyone and anyone who has cash lying around park their money in Properties. Register it at the whole purchase price. See all the black money come out. Expect HOARDS and HOARDS of money come out. 75% of the unsold inventory will be sold in no time.
5. Reduction in Loans
8% and 9% home loans is ridiculous. Loans in USA 3.5% to 5%. It is affordable. Paying Rs. 1 Lac per Crore at this rate. It is ridiculous. People are losing their jobs. Everyone is facing a salary cut. Those who bought before Covid-19 Lockdown are renegotiating or abandoning the deal completely. Banks will be renegotiating their loans again, when they find out there have been salary cuts. It is a grim situation.
These are just few of things that come to my mind. The government will lose revenue in this, but will definitely give it a power boost to the real estate industry on whom MANY subsidiary industries depend on.
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