Haryana’s real estate market will crash if govt imposes 2% duty on transfer of properties: Developers

Haryana government’s plan to impose 2 percent additional duty on transfer of immovable properties, will put Gurgaon’s real estate market at a disadvantage, according to property developers.
“Gurgaon deals will be hampered, especially in the ready-to-move in property segment, where the buyer has to pay the stamp duty on transaction. At this time, when people are consolidating their real estate portfolio into a better upgraded home to live in, this move might push home buyers towards under construction apartments, where registration of property is 3-4 years away,” said Anubhav Jain, CEO, Silverglades Group.

Developers said that after the challenging year 2020, the real estate market began to rebound, which was evident in the increasing sales across the country.

“However, the recent announcement of additional taxes on the sale of immovable property by the Haryana Government, on the other hand, would hurt sales growth as it will increase the cost of the property. After realizing the importance of real estate assets, people were expecting the prices to remain favorable, and developers respected it by not increasing the prices even though the raw material cost is high. The developers have been demanding measures that will boost the sector, but this decision is a shocker,” said Akshay Taneja, MD, TDI Infratech.

With the latest imposition of additional taxes, Haryana's markets would crash due to the additional financial burden being placed on buyers.

Haryana should take inspiration from the decisions made by other states such as Karnataka and Maharashtra, which are easing the pressure on buyers to ensure the sector's growth, said developers.

“The 2% additional duty on the transfer of immovable properties in Haryana over and above the stamp duty will raise the cost of home ownership in the state and bring a halt to the festive season momentum in the housing market. However, with more funds available to the municipal bodies, this move will help in the creation of better infrastructure for an enhanced livability for the people of the state,” said Mohit Goel, CEO, Omaxe Ltd.

According to Pradeep Aggarwal, Founder & Chairman, Signature Global Group, the move is detrimental to the overall health of the real estate industry as certain states reduce stamp duties.

“Though the move will increase interest in the primary market, the secondary market is also critical to real estate development. Many people purchase properties as an investment tool, but with the extra duty, the cost will rise, potentially reducing people's interest in the secondary market,” he said.

Amit Goyal, CEO, India Sotheby's International Realty, had a more positive outlook.

“It might not be the only factor impacting real estate deals in Delhi-NCR. For two decades, people from Delhi have been moving to Gurgaon in the search for larger space and more amenities. Gurgaon still has a lot of scope for development, and this trend will continue. This raise in stamp duty could impact some people, but it will not be the only buying factor,” said Goel.