UP Govt's New Flat Registration Norms Cause Concerns Among Homebuyers and Developers
The Uttar Pradesh government's recent decision to mandate flat registration with a 10% payment is causing significant concern among homebuyers and real estate developers. The new policy imposes additional financial burdens and raises questions about its i
Real EstateUp GovernmentFlat RegistrationHomebuyersDevelopersReal Estate MumbaiNov 07, 2024
This policy diverges from practices observed in other states, where the sale agreement generally entails a minimal stamp paper fee ranging from Rs 1,000 to Rs 10,000. At present, buyers and builders establish an initial agreement on a Rs 100 stamp paper, with the Authority becoming involved only after the developer secures an Occupancy Certificate and a Completion Certificate for the project.
Industry experts suggest that this initiative is designed to protect flat buyers and improve revenue generation through stamp duty. The tripartite agreement will encompass property specifics, the total cost, payment conditions, and the date of possession. However, industry leaders highlight the potential ramifications of this mandate, detailing its impact on both homebuyers and the wider real estate sector.
Manoj Gaur, CMD of Gaurs Group and Chairman of CREDAI National, says, “This would not be a favourable practice as it imposes an unnecessary financial burden on buyers who already have to arrange a significant amount at the time of booking. In other states, the sale agreement is processed on a nominal stamp paper valued between Rs 1,000 and Rs 10,000, which is not the case here. The proposed 1% non-refundable registration fee that is part of the provision is also a direct loss for buyers. The lack of clarity on the refund policy in case of cancellation adds to the unease. 6% of the builder-buyer cost in stamp duty at the agreement signing stage is a big amount.”
Typically, 15-20% of bookings in any project are cancelled due to various reasons, which is also mandated by RERA. However, “The new regulation will significantly impact the financial situation of buyers who wish to cancel their bookings, as they are already facing unexpected challenges. The sector is of the view that the present provision would significantly deter the sector in Noida, Greater Noida, Yamuna Expressway, and, in fact, the entire state, where real estate has emerged as a prominent part of the state economy. Therefore, we believe this provision should not be considered as it will impede the growth of the state’s real estate sector.”
Sanjay Sharma, Director of SKA Group, says, “We believe this new mandate by Noida-Greater Noida authorities may create a significant financial strain for homebuyers in Uttar Pradesh. Paying a 6% stamp duty to the government at the agreement signing stage adds to the already-high initial costs that buyers face when booking a property. This makes homebuying harder and more expensive for buyers, especially those in the middle-income bracket. With substantial costs already involved in securing a home, this additional burden is likely to discourage potential buyers. Further, the imposition may also affect PM Modi’s vision of Housing for All segments, which addresses the longstanding housing needs of buyers by providing them with safe, secure, and quality housing. Thus, we look forward to the authorities reconsidering this decision, as it could stifle growth in the real estate sector and limit homeownership opportunities for many.”
Under the previous regulations, purchasers used to enter into an unregistered sales agreement with the developer for a unit without incurring any stamp duty on the total amount of the builder-buyer agreement. Stamp duty charges amounting to 5% of the total property cost are paid when the flat is ready for occupancy and the registration process is completed.
Neeraj Sharma, Managing Director of Escon Infra Realtors, says, “The recent stamp duty imposition on sale agreements could have a stifling effect on real estate transactions. Buyers are already burdened with substantial costs at the time of booking. Buyers require flexibility and clarity in their transactions, and this imposition may bring additional financial pressure and deter them from going forward with purchases. In light of these concerns, we respectfully urge that the government reconsider making this provision applicable within Uttar Pradesh’s real estate sector.”
Jitendra Goyal, Sales Director of Trisol RED, says, “The financial burden of this policy is likely to make homeownership unattainable for a large segment of the population, thereby hindering the dreams of many families to own a home. Many middle-class families, especially first-time homebuyers, could be priced out of the market by the 6% stamp duty imposed at the initial stage of property transactions. With the Noida, Greater Noida, and Yamuna Expressway regions experiencing a robust surge in sales, we believe this policy may act as a major deterrent to potential buyers. Simplifying procedures and reducing costs would encourage more buyers to enter the market, ultimately benefiting the sector as a whole.”
The government’s decision to require flat registration with a 10% payment has generated considerable apprehension within the real estate industry. Although this initiative is intended to safeguard buyers and improve revenue collection, leaders in the sector are calling on the government to reassess this policy to support the ongoing development of Uttar Pradesh’s real estate market.
Frequently Asked Questions
What is the new flat registration policy in Uttar Pradesh?
The new policy requires homebuyers to register builder-buyer agreements upon the payment of 10% of the flat’s price, along with a 6% stamp duty and a 1% registration charge.
How does this policy differ from practices in other states?
In other states, the sale agreement generally involves a minimal stamp paper fee ranging from Rs 1,000 to Rs 10,000, whereas Uttar Pradesh mandates a 10% payment, 6% stamp duty, and 1% registration charge.
What are the main concerns of homebuyers and developers about this policy?
The main concerns include the additional financial burden, lack of clarity on refund policies, and the potential to deter new buyers, especially in the middle-income bracket.
How does this policy affect PM Modi’s Housing for All initiative?
The policy may make homeownership more difficult and expensive for middle-class families, potentially hindering the Housing for All initiative.
What is the government's rationale behind this policy?
The government aims to protect flat buyers and improve revenue generation through stamp duty, although industry leaders are calling for a reassessment of the policy.
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