Since last few years real estate (especially residential segment) was passing through rough patch and Covid-induced lockdown almost hit a final nail on the coffin with many companies reporting zero revenue for some months and new launches becoming ‘no launches’. Government had to dole out many incentives to revive the sector though the turnaround initially was very slow. It was only when some states like Maharashtra and Karnataka announced the stamp duty reduction home buyers started looking at the sector with renewed interest. Thus, lower stamp duty and mortgage rates have played crucial role in reviving the sector.
However, such measures are not new. In previous unprecedented times of extreme market stress – such as post structural reforms like Demonetisation, Real Estate Regulatory Authority (RERA) etc. – some state governments gave concessions to boost their sluggish real estate markets. For instance, in FY 2017-18, the Haryana government slashed circle rates by 3-8% (which are usually revised upwards every year) to push housing sales while Maharashtra kept their ready reckoner rates unchanged, instead of revising them upward, the same year to push demand.
These measures clearly indicate that incentive drive demand in real estate sector and the government should use the same logic to promote Green buildings in India. And providing stamp duty concessions can be a major trump card in boosting the demand for Green buildings in the country.
Stamp duty rates in major states largely hover anywhere between 5-8%, but they are lower in some states if property registration is executed in the name of a woman. Delhi, UP, Rajasthan, Punjab and Haryana offer relaxation in stamp duty for women buyers. The exemption on stamp duty ranges from 1-2% in different states. Despite this concession stamp duty in India are on the higher side. Note that stamp duties in other countries range between 1% and 4%.
Decarbonising the India’s housing stock is one of the biggest challenges to the India’s efforts to meet its carbon targets, and its high time that the government sets out in clear terms how it plans to incentivise property owners to deliver energy efficiency and low-carbon retrofits to their homes in the wake of current pandemic spread curtailing the availability of time and resources for the purpose. Homes in our country are some of the leakiest in the world (in terms of energy efficiency) and are responsible for more than one third of emissions and energy use, while the government is yet to set out (in clear terms) how it plans to set out its programmes to achieve the desired goals. Perhaps, recent experiment with stamp duty concessions by some state governments can be utilised fruitfully in promoting Green building in the country. The government needs to give serious thought to this proposal.