Apartment registration mandatory

Its time for the speculators to exit the market since the government plans to make apartment registration mandatory at the time of booking. This bitter pill is a bit too late since prices have jumped up 100% and more over the past couple of years. This is an ill-conceived plan and will put the apartment buyer at risk when dealing with small time builders. More often the not, construction is delayed by atleast 6 months to 18 months and many times in times of tight liquidity the apartment is left unfinished. So speculators and end-owners of these properties will be left in a lurch. Nevertheless in cities like Mumbai where prices have reached dizzying levels, there is bound to be a slump since no-one likes to pay 10-20L (10% of 1-2 crore) as registration if they dont plan to stay in it. Lets keep watching as the party unwinds and the drunk's stagger their way home

Financial Express writes
NEW DELHI, JUN 26: It may not be easy to frequently sell property for a hefty premium much longer. With an eye to curb speculation and claim a slice of such transactions, the government plans to make it mandatory for all buyer-seller agreements to be registered. According to industry sources, registration will have to be carried out within a week or two. Since the subject falls under the state list, individual state governments will decide the registration fees.
SHUTTING A WINDOW

• Registration will have to be carried out within a week or two
• Individual state governments will decide the registration fees
• Will deal a blow to the speculator market and check inflation


At present, it is mandatory to register an apartment only after one gets possession. That leaves open a window of opportunity for speculators to resell property at a premium during the period between initial payment (the advance) and actually taking physical possession.

Here’s how it works: the cost of an apartment of 2,000 sq ft at Rs 5,000 a sq ft works out to Rs 1 crore. The booking amount of, say, 5% is Rs 5 lakh. As marketing hype escalates the price by 10-20%, the speculator offloads the apartment. If the sale price works out to Rs 6,000 a sq ft, the investor pockets a cool Rs 20 lakh on an investment of Rs 5 lakh.

“In fact, property usually changes hands four to five times before it actually comes to the end-user. By introducing such a provision, the government will deal a blow to the speculator market and check inflation in the bargain.

Further, it will also enable the government to know how many times a particular property has changed hands,” says Sandeep Donald Shah, director, Taylor Devices.