Mumbai property registrations see decade’s best April led by spillover effect

Property registrations in Mumbai, the country's biggest real estate market, were the best in 10 years for April with more than 10,136 completed deals, due to a spillover effect from earlier months.

The completed deals led to stamp duty revenue collection of Rs 514 crore during the month, data from the Inspector General of Registration (IGR), Maharashtra, showed.

Experts said a spillover effect from earlier months pushed up numbers as actual deals concluded in April were much lower.

The onset of the Covid-19 second wave, local restrictions and partial lockdowns had, as expected, slowed the sales momentum, resulting in delayed conclusion of deals.

Only 7% of these registration numbers were from new residential sales concluded in April, while 93% of the registrations were from properties transacted between December 2020 and March 2021 for which applicable stamp duties were paid during the lower rate window, a study conducted by property consultant Knight Frank India revealed.

In December, the Maharashtra government had given a leeway of four months to homebuyers to register a property after payment of stamp duty, to prevent crowding at registration offices.

This ensured that homebuyers who had purchased residences and paid stamp duty on or before March 31, had a maximum window of four months - until July 31 - from the respective date of payment of stamp duty for registering their apartment.

“The residential real estate sector had shown a healthy bounce back in the last few months backed by reduced stamp duty, contributing greatly to the state’s exchequer. The demand stimulus provided by the state helped the sector inch back providing employment and economic stability,” said Shishir Baijal, CMD, Knight Frank India.

This proved that the stamp duty incentive “was a master stroke” that kept the sector and the state economy buoyant during the pandemic, Baijal added.

In April, as the government withdrew the reduction in stamp duty, coinciding with the second wave resulting in a virtual lockdown, demand and sale of new homes was severely impacted.

Baijal said the state government will need to reconsider measures at an opportune time to reinvigorate demand, such as a reduction in stamp duty.

The state government’s collections from stamp duty registered a modest 12% increase in April against April 2019, despite a rise of 71% in units registered in the comparable period. This was because 93% of registrations in April were for apartments that were transacted in the preceding four months by paying stamp duty rates of 2% and 3% , and registered only now.

The government’s revenues from property registrations during the last seven months of lower stamp duty window until March 2021, were 66% higher than those collected during the preceding eight months of 2020 - until August 2020.

This indicates that reduction in stamp duty rates had aided sales, leading to higher revenue generation for the government.

With the objective of kick-starting the real estate sector and nearly 260 linked industries by encouraging housing sales, the state government had announced a reduction in stamp duty charges to 2% from 5% from September to December-end.

Stamp duty was charged at 3% of the agreement value between January and March 31.