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In a recent blow to prospective homebuyers, the Tamil Nadu government has made a significant change by abolishing the longstanding practice of separately registering undivided shares (UDS) of land and construction agreements. Going forward, completed constructions will be encompassed within a single comprehensive sale deed, subjecting buyers to a consolidated stamp duty and flat registration fee of 9 percent. This revision translates to buyers facing an approximate 50 percent increase in their registration charges. Prior to this alteration, since 2020, the registration process has involved two distinct components: a 9 percent registration fee for UDS and an additional 4 percent fee for construction agreements.
To provide a concrete example, for a flat priced at 1 crore, where the UDS value was indicated as 40 lakhs and the building value was 60 lakhs, the total registration charges previously amounted to 6 lakhs. However, under the revised 9 percent fee structure for the 1 crore value, the charges will now stand at 9 lakhs. This recent change marks the third instance of fee hikes orchestrated by the registration department within the span of a few months, prompting concerns within the real estate sector. Builders have been vocal about their appeals to the government for a rollback of these hikes, asserting that these increases are negatively impacting the purchasing capacity of customers and thus leading to a slowdown in sales and the overall industry.
In contrast to the past practice, where builders registered both UDS land and construction agreements even after obtaining completion certificates, this shift now provides purchasers with a single comprehensive sale deed. B. Jothi Nirmalasamy, secretary of the commercial taxes and registration department, highlights that this provides buyers with an additional layer of legal protection. With the aim of preventing misuse and ensuring accurate registration fees, the Secretary has instructed the Inspector General of Registration to guide registering officers against mandating the inclusion of building details with undivided shares during the initial sale of a flat with land in real estate projects. This directive is based on the issuance of a 'completion certificate' for the building.
The Chennai chapter of CREDAI (Confederation of Real Estate Developers' Associations of India) has voiced its reservations about the imposition of a 9 percent flat registration cost based on the total apartment cost. They argue that altering registration charges without seeking proper public input could potentially dissuade potential buyers, dampening market activity.
In summary, the recent alteration in Tamil Nadu's registration process signifies a notable shift in the property buying landscape. The amalgamation of UDS and construction agreements within a single sale deed has brought about an increase in registration charges, prompting concerns within the real estate sector and calling for a re-evaluation of the recent fee hikes.
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