By ARUN PRATAP SINGH
DEHRADUN, 19 Jul: At a time when the real estate business in Uttarakhand is witnessing an unprecedented low, the decision of the state government to hike circle rates in the state between 25 and 50 percent is a big blow for the industry. It may be recalled that the real estate business was badly affected following the demonetisation by the Modi Government in November, 2016. According to the real estate developers as well as established property dealers, the business has not improved much even after two and a half years since demonetisation. As a result, the property rates have not seen any significant rise throughout the state with the exception of a few prime locations in select cities of the state and some prime locations in rural regions. Sources in the revenue department claim that the major increase has been proposed with regard to agricultural land in the state where the circle rates could go up by up to 40 percent. But the circle rates in urban areas as well as of commercial properties would also be revised. In some cases, the proposed hike could be up to 50 percent. The proposal in this regard is likely to be submitted for approval before the state cabinet at its next meeting. According to a leading developer in Dehradun, there is a huge unsold inventory of flats and apartments as well as fully developed plots in approved colonies of Dehradun. He felt that the decision of the government to hike the circle rate would further worsen the crisis in the real estate sector. He added that more than two and half years since demonetisation, the real estate sector continued to be the worst affected sector of the country’s economy and that the situation was no better in Uttarakhand. There was a huge cash crunch being faced by the developers since there were no buyers coming forward to purchase property in Dehradun and elsewhere in the state. While those needing accommodation for personal use still purchased property, those investing in property for monetary and commercial gains were no more showing any interest. Not only this, the credit from the banks and other financial institutions too had dried up, claimed another leading businessman from Dehradun, who had diversified into real estate business only five years ago. He admitted that the prices of apartments, flats and commercial plots had seen a fall due to lack of buyers. It may be recalled that it has been a norm for the government to revise the circle rates once every two years. The circle rate is the minimum value at which the sale or transfer of a plot, built- up house, apartment or a commercial property can occur. This rate is revised in Uttarakhand once every two years by the district administration on the direction and approval of the state government’s revenue department. The government will charge stamp duty on purchase and registry of property on the basis of circle rates even if the property is purchased at a price lower than the circle rates. While in the past, the circle rates used to be much lower than the actual market price in any location, the situation has changed in recent years. In some areas like Rajpur Road, Race Course, Dalanwala, Laxman Chowk, etc., the circle rates are somewhat closer to the actual market prices. Higher circle rates mean not only higher stamp duty for the buyers but also higher capital gains tax for the sellers. In addition, the continued rise in home loan interest rates has not helped the real estate sector in any manner. Meanwhile, sources in the revenue department have indicated that the government may not agree to the demand of realtors to postpone or review the proposed hike in the circle rates.