Rate check

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TNS

An important part of understanding the price ups and downs in the real estate market is the “ready reckoner rates”. Ready reckoner rates for each area in city are defined by the the state government.

What it is

Ready reckoner rates are the prices of land, residential properties, and commercial properties for any given area defined and published by government each year. These are revised from time to time whenever the government feels that there is a need for price revision. Stamp duty and registration costs which are paid by a real estate buyer can’t be below the ready reckoner price or the actual price of the property.

Let’s say that ready reckoner rates for some location is set at Rs 4,000 per sq ft (as per the state government) and the cost of the property according to this comes at Rs 40 lakh. Now imagine that the builder is quoting the cost of the property to you at Rs 50 lakh. Now the stamp duty will be paid on Rs 50 lakh only, because its higher than Rs 40 lakh. However, suppose a buyer decides to pay Rs 25 lakh in black and only Rs 25 lakh in white money, still the registration and stamp duty will be paid on Rs 40 lakh only, because that the minimum pricing set by the government is Rs 40 lakh.

Linked to built-up area

It is also important to know that the ready reckoner rates are linked to the built-up area of the property, and not on the carpet or super-built up area. So if ready reckoner rate is Rs 4,000 sq/ft and builder tells you that he will also sell the property to you at Rs 4,000 sq/ft, don’t get fooled, because the builder tells you the pricing linked with the super built-up area and not the built -up area, which in most of the cases is higher, so eventually the rate charged by builder is always higher, if you convert it for the built-up area. For example if the super built-up area is 1,000 sq/ft and built-up area is 800 sq/ft, then Rs 4,000 per sq/ft area quoted for super built-up area (Rs 40 lakh cost), is the same as Rs 5,000 sq/ft quoted for built up area (same Rs 40 lakh).

How ready reckoner rates affect the prices

As ready reckoner price is the FAIR PRICE (which is fair value) set by government itself, builders can charge the premium on that fair price depending on market condition, demand, quality and their goodwill or exploitation power. So the market price (the actual prices prevailing in market), will definitely be always higher than than ready reckoner prices (benchmark). Now, if the benchmark itself is higher at any given point of time and also keeps increasing over years, the market price quoted by builders will also be high.

For example in one of the areas called “Kondhwa” in Pune, the ready reckoner price set by government is around Rs 3,700 per sq/ft. However, the builders are charging anywhere from Rs 4,500 to 6,500 per sq/ft at the moment. Imagine, if this year government increases it to Rs 4,000, then automatically the rates will go up by that much margin, because builders get a good reason to escalate the cost.

“One of the largest revenue sources of any state government is the stamp duty from property registrations and it’s always in state government’s interest (from revenue point of view) to keep the ready reckoner rates higher or increase these if there is any justification for it like development and road projects etc”, says Mangat Rai, a tricity-based real estate consultant.

Where to find the ready reckoner rates for your area

Now there are a few ways in which you can find out the ready reckoner rates of your area (or any area).

nOn the website of “Registration and Stamp Duty Department”

Each state government has its own department of Registration and Stamp Duty. You can reach the website by searching the sentence “Registration and Stamp duty department” and adding state name along with it on google. On the website, you need to search for a link – which says something like “market rates” or some equivalent in the local language of the state. If you are lucky, you might reach the final page which helps you find out the ready reckoner rates for all the cities in the state. It will help you find the rates as per city, taluka, location or survey number

* Using RTI application

The second way to find out the rates is to use the RTI application against the same Registration and Stamp Duty department (many times called “revenue department” like in Delhi). All you need to do is file a RTI to the respective officer and to your jurisdiction asking for the rates in particular city and area.

* Office of Sub-registrar

One of the best ways would be to go to the sub-registrar’s office (where the properties are registered) and find out the rates from there itself.

Understanding the terminology

Carpet area

Net usable area of property (imagine you put carpet, what all part of flat, it will cover)

Built-up area

Carpet area + walls and doors area (imagine you remove the thick walls and all doors, then what you will be left with)

Super built-up area

Built-up area (which you get) + staircase, garden, gym, swimming pool and everything you use (your proportion)

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