New Delhi: The Delhi government Monday hiked the circle rates minimum prices for sale or purchase of real estate by 15 to 250 per cent, with experts welcoming the move and calling it "a step in the right direction".
"The circle rates have been increased by up to 250 per cent in A category colonies and 15 per cent in the last category (H) colonies," Chief Minister Sheila Dikshit told reporters after a cabinet meeting here.
While the circle rates for A category colonies, which include Friends Colony, Nehru Place, Green Park and Greater Kailash, will rise from Rs 86,000 per square metre to Rs 215,000, those in B category will go up 100 percent, from Rs 68,200 to Rs 136,400.
The rates of C category property will increase from Rs 54,600 to Rs 109,200.
The rates of D category - Rs 43,600 - will be revised to Rs 87,200, while the rates for E category will be Rs 47,840, up from Rs 36,800.
The new prices of F and G category will be Rs.38,640 and Rs.31,510, respectively while the price in H category has risen from Rs.13,800 to Rs.15,870.
The decision comes against the backdrop of a Supreme Court ruling holding the transaction of property based on power of attorney as invalid. The move also aims at ensuring transparency and plugging the revenue loss to the government.
Dikshit said the step has been taken to ascertain the actual rates of the property and ensure the legal transactions.
The government has also decided to review the circle rates every two years, she said.
The decision was welcomed by experts in realty sectors.
"This latest hike in circle rates in Delhi is a welcome step keeping in view wide gap between market rates and the government-determined circle rates, especially when compared to suburban Gurgaon and Noida," said Vinod Behl, editor of Realty Plus magazine.
"This will check speculation and black money transactions especially in the secondary market. It will benefit genuine buyers and bring in transparency," Behl told IANS.
Sachin Sandhir, managing director of think tank, RICS South Asia said: "The upward revision in circle rates is a step in the right direction as it will help bring some level of rationalisation in the market."
"However, the increase in rates to the extent of 250 percent may act as a deterrent and adversely affect consumer sentiment as property registrations will become costlier," he added.
"For a genuine buyer, an increase in circle rates could be regarded as a good move as consumers will now be able to avail higher loans from banks and financial institutions considering home loans are usually 80-85 percent of the purchase price or market value of the property, for which circle rates are an indicator."
The chief minister said the rationalisation of the circle rates will automatically enhance the revenue share of the Municipal Corporation of Delhi (MCD) by way of transfer duty.
"The total revenue generated from the circle rates will be around Rs.700-800 crore," she said.
This is the second hike this year. The circle rates being increased by 100 percent in February. The officials had cited the flow of black money in property transaction as the reason for increase in the circle rates.
The circle rates were notified for the first time on July 18, 2007.
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