Residential property prices are set to rise sharply in Maharashtra, as the state government on Thursday hiked the average ready reckoner (RR) rates in the state by 8.8% for the next financial year, after keeping it nearly unchanged for the past four years. The revised rates will become effective Friday.

Ready reckoner rates are the benchmark valuation of real estate. It is used for both calculation of capital gains under income tax, and payment of stamp duty to the state government. Also, the premiums, transfer of development rights (TDR), floor space index (FSI) rates are linked to RR rates, which will also add to the cost of houses and would lead to price rise. There was no increase in ready reckoner rates for the FY22. The rates were last revised for the FY21 marginally by 1.74%, given the pandemic. The last substantial revision before that was in 2017-2018, when the rates were revised upwards by 5.86%. In the year prior to that the rates were increased by 7%, and in 2015, the rates were up by 14%, according to a press note from the state government.

According to the statement, average increase for the state except Mumbai is 5%, while average increase for the BMC municipal area is 2.34%. The highest rise in the Mumbai Metropolitan Region (MMR) is in Thane, where the RR rates will increase by 9.48%, followed by far-off suburbs of Panvel by 9.24% and Vasai-Virar by 9%.

Mumbai’s twin city Pune will also see a substantial increase in prices with RR rates revised upwards by 6.12%. Pimpri Chinchwad, one of the popular residential suburbs that is home to extensive industry and is well known for its automotive, IT and manufacturing industries, will see a sharp rise of 12.36%.

Nashik and Aurangabad are among other cities in the state that will see steep rise in RR rates, with a rise of 12.15% and 12.38%, respectively.Real estate developers have reacted strongly against the sharp increase in the RR rates, with Credai Maharashtra questioning the timing of the move. “Industry is going through very tough and challenging times due to input material price hike by about 40%. Many developers especially in the affordable category are unable to buy at these exorbitant rates. This may lead to temporary closure of work. In these tough times a hike in the RR rates was highly uncalled for,” it said in a statement.

Anil Pharande, president, Credai Pune, said, “Government did not hike the rates for two years due to the pandemic, but they should have noted that the industry is still grappling with survival in spite of increased traction, till date the selling rates have not increased so an increase in RR rates is totally uncalled for. Premiums, TDR, FSI rates will all increase adding to out input costs and will directly impact the buyer.”