In the aftermath of the pandemic, the Maharashtra government reduced stamp duty rates in September 2020 to stimulate the real estate sector. The reduction had a significant impact on the Maharashtra real estate sector. The sentiment of buying over renting, coupled with the need to upgrade to a bigger and better living space, led people to realize the value of owning a home, which emerged as a silver lining for the real estate sector.
Recently, Maharashtra’s deputy chief minister Devendra Fadanvis announced that the state government will explore ways to further reduce stamp duty charges for property transaction registrations and resolve issues related to transfer of development rights (TDR) to stimulate the state’s real estate sector.
The reduction in stamp duty rates by 2% for a limited period encouraged property purchases, resulting in a significant increase in residential sales and housing demand. In Q1 of 2021, the number of registrations exceeded 90,000.
While the move was a major boost for the housing sector during and after the pandemic, input costs such as raw materials and labour, along with repo rate hikes, have led to an overall increase in housing rates. A reduction in stamp duty charges at this juncture will help to alleviate the economic burden on the industry and homebuyers and further stimulate the growth of the real estate sector.
With redevelopment projects gaining momentum and bringing much-needed uplift and modernization to micro-markets in Mumbai, a stamp duty cut will provide developers with last-mile support, encourage fence-sitters to the sales office, and drive overall economic growth.
The real estate sector has contributed significantly to India’s GDP and job creation. However, various factors have led to a slowdown in recent years, with the pandemic being a major contributor. The government has been proactive in implementing timely measures and solutions to strengthen the real estate sector. A reduction in stamp duty charges at this point in time will serve as a significant demand booster and encourage people to invest in homeownership.
