A RUDE REALTY SHOCK

On February 4, a piece of news hit Gujarat's real estate developers like a tonne of bricks. The state government announced that it was doubling the circle rates relating to property, known as jantri rates locally, with immediate effect.

- Jumana Shah

Also called the Annual Statement of Rates (ASR), it's the minimum benchmark rate at which any property or land transaction can take place in the state. It determines the actual stamp duty paid to the government on every transaction at the mandated 6 per cent. All transactions beginning February 6 were to be done per the new jantri rates. Though realtors had loosely anticipated the revision-it was last done 12 years ago the suddenness and magnitude of it shocked big and small players alike.

"It was a bolt from the blue," says developer Vijay Shah, who has been in the industry for close to four decades, adding that this kind of rate hike has never taken place before. CREDAI (Confederation of Real Estate Developers' Association), Gujarat, stated that 50,000 ongoing deals will be affected. It also contested the standard hike of 100 per cent across the state, calling it inappropriate, as land rates in rural areas may not have appreciated as much as in the urban areas, and people may end up paying higher than the market rate. "Revision of jantri rates is an ongoing exercise to be done periodically, from twice a year to once every two years. For reasons that are anybody's guess, this revision had not happened for 12 years. But every time, the revision has been a consultative process with a lead time of a few months," Shah says.