Coimbatore, India: The implementation of new registration charges based on the composite value of apartments from December 1, 2023, has thrown the Coimbatore real estate industry into disarray, according to members of the Confederation of Real Estate Developers Associations of India (CREDAI). They claim the move has brought registrations of flats in under-construction and new projects to a standstill, creating confusion and financial hurdles for both developers and buyers.
- Increased Registration Costs: The new system charges 6% or 7% of the apartment’s composite value, significantly higher than the previous 9% on land and 4% on construction. This translates to substantial cost increases for buyers, like a ₹1.42 lakh jump for a ₹59.67 lakh apartment.
- Multiple Changes & Complexities: Frequent changes in registration procedures and the introduction of a single document with government-fixed guideline values add complexity and confusion for developers and buyers.
- Impact on Advance Payments & Loans: The requirement for registering only the agreement for sale initially, with a 1% charge on the advance, limits developers’ ability to collect funds in stages. This, in turn, can hinder project progress and make it difficult for buyers to secure bank loans.
- Reduced Revenue & Unequal Treatment: The new system reportedly leads to decreased government revenue, while allowing individual plot buyers to avoid registration fees by building without them.
- GST Confusion & Guideline Value Issues: Developers express concerns about additional GST charges incurred due to the new system and ambiguities in fixing guideline values for apartments and villas.
- Reduce registration charges to 5% from the current 6-7%.
- Issue a single legal document conforming to RERA guidelines.
- Determine guideline values for apartments and villas based on land value per square foot and applicable construction rates.
- Streamline procedures and address ambiguities to ensure clarity and ease of implementation.