Chennai, [Current Date] - The registration of new apartments in Chennai has hit a standstill since December 2023, with developers citing the introduction of a single-document registration system by the state government in March of the same year as the primary cause.
According to developers in the city, the new system has resulted in a surge of registration charges for homebuyers, soaring upwards of 100 percent between March and December 2023. The transition to this system has led to significant disruptions in the real estate sector, notably affecting the registration process and homebuyer sentiment.
Data from property consultancy ANAROCK reveals an 11 percent quarter-on-quarter decline in the total number of apartments registered in the third fiscal quarter of 2023, plummeting to 4,900 units, marking the lowest among the top seven cities in India.
Ridharan Swaminathan, Vice President of the South Zone at the Confederation of Real Estate Developers' Associations of India (CREDAI), highlighted the shift from a two-document registration system to a single composite method. Under the previous system, registration required a construction agreement and a document referred to as an undivided share of land (UDS). UDS represents the share of land allocated to an individual upon purchasing a flat.
However, with the recent overhaul, the state opted for a consolidated registration process using a single sale deed, leading to a uniform composite value determination for each area to calculate registration charges.
Swaminathan emphasized the challenges posed by the new system, stating that sale deed registration cannot occur until construction completion. Consequently, homebuyers are unable to book flats in projects under construction or in their initial stages, depriving developers of crucial project funding.
Furthermore, the absence of a sale agreement impedes the registration of projects under the state real estate regulatory authority (RERA), designed to safeguard homebuyers' rights and ensure project completion.
CREDAI disclosed ongoing efforts to collaborate with the state government to enhance clarity surrounding the new property registration framework.
Homebuyers bear the brunt of the soaring charges imposed by the composite system. Registration fees under this system are capped at 6 percent for properties valued up to Rs 50 lakh, escalating to 7 percent for properties priced between Rs 50 lakh and Rs 3 crore, and reaching 9 percent for properties exceeding Rs 3 crore.
Developers highlighted instances where registration charges surged by over 100 percent between March and December, citing examples such as properties in prime areas like Poonamallee and Teynampet.
In Poonamallee, for instance, a property valued at Rs 44 lakh incurred registration charges of Rs 1.2 lakh in March 2023. However, under the new system, the same property now commands a registration fee of Rs 2.9 lakh, reflecting a substantial increase.
The exorbitant charges have resulted in a notable decline in completed deals, prompting developers to urge the state government to reconsider the registration charges and reintroduce legal documentation such as sale agreements for under-construction projects.
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