How Ready Reckoner Rates change from one place to another

Atharva, an IT professional, plans to marry his childhood sweetheart, Amrita, a wellness coach, in November 2024. Their long-cherished dream has been to begin their new life in their own home. Atharva and Amrita have been diligently saving for years to buy their first home right before the wedding.

After months of searching, they found a beautiful 2 BHK in Whitefield, a suburb in eastern Bengaluru, priced at ₹90 lakhs. However, during the registration process, they were informed about the Ready Reckoner Rate (RRR), which increased the price by another ₹2.5 lakhs.

Amrita, who had learned from her cousin, a recent homeowner, about how RRR may increase the property's stamp duty and registration fee, was prepared well in advance. Hence, their home-buying plans stayed on track despite the increased budget.

What are Ready Reckoner Rates?

RRR, also known as circle rates or guidance values, are the minimum prices established by the state government for property transactions in various areas.

How Ready Reckoner Rates affect homebuyers

Extra upfront costs

Ready Reckoner Rates (RRR) directly influence stamp duty and registration fees, which are based on the higher value between the transaction price and the RRR. Even if the buyer pays less for the property, these fees are calculated on the RRR, increasing the initial costs.

Bigger loan potential

Banks use RRR to decide loan amounts. A higher RRR can result in a larger loan, making it easier for buyers to afford a new home.

Tax surprises

Purchasing a property below the RRR can lead to higher taxes for both buyers and sellers. It is important for homebuyers to be mindful of RRR to avoid unexpected tax consequences.

Why do Ready Reckoner Rates vary across cities?

• Property values: The main reason is the value of properties in different areas. High-demand locations with premium real estate have higher Ready Reckoner Rates (RRR). For example, Thane has higher rates than nearby Kalyan due to its better infrastructure and amenities. Similarly, high-end areas like Vasant Vihar in Delhi have higher rates because of their prime location and excellent infrastructure.
• Market conditions: Local real estate market trends also influence RRR. Areas with high demand and limited supply have higher rates due to increased buyer competition. Conversely, low-demand areas may have lower rates to encourage more transactions. For instance, Koramangala in Bengaluru has higher rates compared to Whitefield due to its higher demand.
• Amenities and infrastructure: The presence of adequate amenities and infrastructure also influences RRR. Cities with well-developed infrastructure, like Thane, have higher rates. In contrast, areas like Kalyan, which is developing rapidly, may still have lower rates reflecting their current infrastructure status.
• Property type and usage: The type of property, whether residential, commercial, or industrial, affects the RRR. Commercial properties usually have higher rates than residential ones due to their greater market value and revenue generation potential.
• Development projects: Ongoing and planned infrastructure projects significantly impact ready RRR. Areas near metro lines, highways, or commercial developments often have a higher RRR, as these projects enhance the area's attractiveness and accessibility.
• Government policies: State government policies, including revisions and updates to the RRR, play a crucial role. For instance, Maharashtra revises the rates annually to reflect market changes, ensuring the rates remain aligned with current property values.

Staying informed is crucial

RRR is a vital component of the real estate landscape in India, reflecting property values, market conditions, and infrastructure availability. Understanding these rates proved crucial for first-time homebuyers like Atharva and Amruta. By staying informed and seeking expert advice, homebuyers can navigate the complexities and confidently embark on their home-buying journey.