Up to 75% of housing societies in Ahmedabad may speed up redevelopment deals after the government slashed stamp duty on property transfers done through allotment letters and share certificates.
The Gujarat government’s recent move to waive 80% of stamp duty on certain property transfers is expected to breathe new life into stalled redevelopment projects.
The decision comes as a big relief for thousands of residents living in older housing societies.
It is likely to restart talks in nearly 70% of Gujarat Housing Board (GHB) societies and 75% of private societies, where redevelopment had been stuck due to high stamp duty and penalty costs.
Relief for many
For years, residents in these societies faced serious financial barriers. Properties had been transferred via allotment letters or share certificates rather than registered sale deeds. The situation took a turn for the worse in April when an amendment to the Stamp Duty Act brought in a four-fold penalty on the original duty amount for those creating sale deeds or transferring properties.
Under new policy, property owners will pay just 20 per cent of the original duty. The total liability, including penalties, cannot exceed the amount of the original duty itself. Take a property with a Rs 1 lakh stamp duty. Previously, it would have incurred a total liability of Rs 5 lakh (Rs 1 lakh duty + Rs 4 lakh penalty). Now, the total payable amount is capped at Rs 1 lakh. According to H P Valera, GHB Estate Manager, there are about 9,900 GHB dwellings in Ahmedabad and North Gujarat, with 9,000 of them in Ahmedabad.
“Of the 9,000 housing units in the city, around 70 per cent are those which want to go for redevelopment. However, due to either financial or social constraints or due to lack of documents, they weren’t able to opt for redevelopment,” said Valera. “The biggest issue was financial… which can be managed now due to the recent government announcement… This can fasten up their redevelopment process.”
Win-win for pvt societies
The relief extends to private societies grappling with the same long-standing issue. Jitendra Shah, President of the Urban Redevelopment Housing Society Welfare Association, said that the impact will be immediate.
“Of the 500 societies in Ahmedabad in discussion for redevelopment, around 75per cent are such who were allocated properties between 1982-2001 through share certificates or allotment letters,” he said. Shah explained that these societies will now be able to move forward with their plans.
“They are the ones who will get sure to fasten up their discussion with the developer concerned to close their deal for redevelopment. This is a win-win situation for both-developers and societies,” he added.