Home Registration in UP See New Rule

What are the new norms?

• The Uttar Pradesh Government has introduced new regulations that mandate the registration of builder-buyer agreements upon payment of 10% of the flat’s price which has led to concerns among both buyers and developers.
• Homebuyers are required to pay a percentage of the property’s value as stamp duty to facilitate its registration in government records.
• Additionally, they must bear a registration charge of 1% of the property value for finalizing the documentation in Noida and Greater Noida.
• The inclusion of a non-refundable 1% registration fee in the proposed provision represents an immediate financial burden for buyers. The absence of clear guidelines on the refund policy in the event of cancellation further exacerbates concerns.
• Additionally, the imposition of a 6% stamp duty on the builder-buyer cost at the agreement signing stage constitutes a significant expense.
• Previously, buyers would engage in an unregistered sales agreement with the developer for a unit without being subject to stamp duty on the entire builder-buyer agreement amount. Stamp duty fees, totaling 5% of the property value, are only paid upon completion of registration as the flat becomes ready for occupancy.
• According to industry analysts, the action taken by the UP government is aimed at safeguarding the interests of apartment purchasers while also enhancing stamp duty revenue. The tripartite contract will cover details of the property, total expenses, payment terms, and possession date.
• These new guidelines deviate from the practices followed in other states, where the sale agreement typically involves a nominal stamp paper fee ranging from Rs 1,000 to Rs 10,000. Currently, buyers and builders sign an initial agreement on a Rs 100 stamp paper, with the authority getting involved only after the developer obtains an Occupancy Certificate and a Completion Certificate for the project.

Real Estate Sector Might See Sweltering Impact

• Experts in the field caution about the possible consequences of this decision on homebuyers as well as the overall real estate industry.
• Real Estate Players feel this new mandate by Noida-Greater Noida authorities may create a significant financial strain for homebuyers in Uttar Pradesh.
• Paying a 6% stamp duty to the government at the agreement signing stage adds to the already-high initial costs that buyers face when booking a property.
• This makes homebuying harder and more expensive for buyers, especially those in the middle-income bracket.
• Several developers mentioned that the recent stamp duty imposition on sale agreements could have a stifling effect on real estate transactions.
• Buyers are already burdened with substantial costs at the time of booking. Buyers require flexibility and clarity in their transactions, and this imposition may bring additional financial pressure and deter them from going forward with purchases.
• Manoj Gaur, CMD of Gaurs Group and Chairman of CREDAI told Business Today “This would not be a favourable practice as it imposes an unnecessary financial burden on buyers who already have to arrange a significant amount at the time of booking. In other states, the sale agreement is processed on a nominal stamp paper valued between Rs 1,000 and Rs 10,000, which is not the case in UP. The proposed 1% non-refundable registration fee that is part of the provision is also a direct loss for buyers. The lack of clarity on the refund policy in case of cancellation adds to the unease. 6% of the builder-buyer cost in stamp duty at the agreement signing stage is a big amount.”

Stamp duty in UP

• According to Section 17 of the Uttar Pradesh Registration Act, 1908, individuals purchasing property in Uttar Pradesh are required to register their sale deed at the sub-registrar’s office for transactions exceeding Rs 100 in value. This registration process is crucial for establishing legal ownership of the property.
• In Uttar Pradesh, stamp duty must be paid when a property is sold, and the amount is determined as a percentage of the transaction value. The state government recently adjusted the property registration fee to 1% of the property’s value, replacing the previous fixed fee of Rs 20,000.
• At present, homebuyers in Uttar Pradesh are typically charged a stamp duty of around 7% of the transaction value and must also register the property based on the government's set circle rate.

Editor’s Note