The conflict between the Confederation of Real Estate Developers’ Associations of India (CREDAI), representing private real estate developers, and the Government of Tamil Nadu has escalated. The Stalin-led DMK government’s significant increases in registration and stamp duty charges, along with the introduction of a composite sale deed system, have come under severe criticism. CREDAI criticized these actions, expressing their dissent through full page advertisements in major newspapers.
Full page advert in all major dailies by CREDAI criticising the @arivalayam ‘s steep hike in registration charges. Nothing seems to be going right for this government. Useless. pic.twitter.com/mO6EmOM9Ak
— Sheikh Al Madrassi (@chitthavriddhi) February 11, 2024
The advertisement issued by CREDAI stated, “Appeal to the Government of Tamil Nadu, Revoke the steep hike in registration & stamp duty charges. Stamp duty & registration charges hike is putting a huge strain on the affordability and accessibility of housing in Tamil Nadu.”
The statement further went on to add why the composite sale deed system is a deficient system
“Legal parameters: Apartment for which construction has not started or is under construction cannot be conveyed. System is not in line with other laws such as GST and RERA.
Valuation Issues: Composite values have been fixed without following due process as laid out in the Indian Stamp Act. Street-Wise values fixed are unrealistic
Implementation Issues: Property registration software has not been updated with the new system, values and rates leading to utter chaos at the registrar’s offices.
Unrealistic Hike in Stamp Duty & Registration Charges: As opposed to the government claim that the composite system will reduce the stamp duty and registration charges, the reality is that there is a steep hike in the same.” ,the statement further added.
Several alterations were made to property registration charges and processes by the Tamil Nadu government. Effective July 2023, fees for transferring power of attorney to non-family members saw a 1% increase based on the property’s market value. This impacted redevelopment costs, along with raised charges for various services under the Registration Act 1908, including document searches, safe custody, and mortgage receipts. In August 2023, a flat 9% registration charge on the total cost of apartments was implemented, eliminating separate registration for undivided share and construction agreements. Additionally, starting October 2023, property photos with geographic coordinates became mandatory alleging to prevent fraudulent transactions. In January 2024, the government announced new composite values for roads and streets, with registration charges set at 7% of the composite value. A sudden fee increase on July 8, 2023, further added to the challenges.
The rise in stamp duty and property registration charges has adversely affected home buyers, straining affordability and accessibility to housing. Home buyers faced a significant financial burden, resulting in delayed property registrations for both under-construction and ready-to-occupy projects. The revised charges dictated that 1% of the property’s market value be paid as registration fees, as opposed to the previous flat rate of ₹10,000. The state registration department increased charges for 20 services under Section 78 of the Registration Act 1908 after 20 years. Private attendance charges, receipt document fees, and charges for partition, family settlement, and document release also experienced substantial increases.
The introduction of a flat 9% registration charge on the total cost of apartments had an immediate effect. The insistence on a single document system led to higher financial burdens for customers and potentially reduced registrations, impacting revenue. Despite CREDAI approaching the Madras High Court to challenge the fee increases, the government, on 7 July 2023, increased the fee for registering power of attorney and construction agreements, leading to a severe impact on the real estate industry. Recently the government requested CREDAI’s participation in a pre-budget meeting in January 2024, but the association declined, citing ongoing concerns about the implementation challenges of the composite single document system and impractical valuation rates. CREDAI emphasized its commitment to dialogue but insisted that meaningful conversations could only occur once core concerns were addressed.
In response to the issue, Tamil Nadu BJP President K Annamalai released a statement on his official X handle expressing his criticism in a sarcastic tone towards the government led by Stalin.
“On the 14th of December 2023, we condemned the TN Govt for implementing the registration of flats under composite value & thus increasing the registration charges by 100-150%. The DMK has been constantly searching for ways & means to exploit people & has turned deaf ears to our representation. Today, the Homeowners & Builders Association has given a full-page Ad in Newspapers condemning the act of the Government & has sought an immediate rollback of registration using a composite method. If the Government is desperate for revenue, Thiru @mkstalin should demand that Murthy Fees & Sekar Babu Fees be deposited to the Government treasury to cover the deficit of the rollback!“, Annamalai said.
On the 14th of December 2023, we condemned the TN Govt for implementing the registration of flats under composite value & thus increasing the registration charges by 100-150%.
The DMK has been constantly searching for ways & means to exploit people & has turned deaf ears to our… pic.twitter.com/ilMiN5LIOg
— K.Annamalai (@annamalai_k) February 11, 2024
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