Understanding Ready Reckoner Rates & Simplifying Home Purchase in Kochi

Posted onJan 26, 2024

Several factors affect the prices of real estate, but the most significant factor is the ready reckoner rate. This is a rate defined by state governments – which means it will differ according to the state. When you understand the ready reckoner rates properly, you will be able to analyse the real estate market trends in Kochi correctly and make better investment decisions.

What is Ready Reckoner Rate?

The ready reckoner rates or circle rates are the rates of property as estimated by the government. They can also differ between districts, cities, or neighbourhoods within a state. Several factors are taken into consideration to determine the cost of real estate in different areas.

The authorities establish a price level below which property cannot be sold or purchased in that particular area. This price level is the ready reckoner rate. The stamp duty and registration fees are based on these ready reckoner rates.

What is the Purpose of The Ready Reckoner Rate?

The ready reckoner rates set the minimum price; there is no cap of the maximum price. Therefore, in reality, you’ll often find a huge difference between the ready reckoner rates and market rates. Most deals in Kochi are negotiated based on the prevailing market rates, and the stamp duty and registration fees are calculated on the market rates. Sometimes the government may lose money if there is too much difference between the ready reckoner rates and market rates.

For example, if the ready reckoner rates are very high, the stamp duty and registration fee also increase significantly. This can discourage people from registering their real estate purchases. So, it would be a wise move for the government to bring down the ready reckoner rates to match the market prices so that they don’t lose the registration fees.

How Does a Change in the Ready Reckoner Rate Affect Demand?

When RR increases, property becomes expensive, making it less attractive to home buyers, and push down demand. Similarly, if the ready reckoner rate is low, property is cheaper, and people are more likely to be inclined to purchase or invest, and it is likely to be an ideal location for a family to settle down.  This is how ready reckoner rates impact real estate demand.

The Importance of Ready Reckoner Rate for Home Buyers

A potential house buyer might get a fair idea of how much money they will have to spend by looking at the ready reckoner value of properties in a specific neighbourhood. When an increase in the RR rate is anticipated, market rates for properties are often higher, and local property values tend to rise. Especially if the acquisition is being funded by a house loan, it is advantageous for buyers to purchase property in an area where the difference between the ready reckoner rate and the market rate is relatively less.

When property is sold below the ready reckoner rate, you may face problems like:

·        Attract legal scrutiny and be suspected about illegitimate transaction

·        Authorities monitoring fair market practices may suspect you

·        You may earn less profit due to property undervaluation

·        Property valuation trends may be impacted and give rise to unrealistic RR rates that could throw future dealings into disarray

This is why it’s important that buyers and sellers must consider the long-term impacts and ensure that property transactions are transparent and legal.

Varma Homes is a reputed real-estate developer with transparent dealings. Look at their completed apartment buildings and check out the amenities, and you’ll understand the benefits of living in luxury apartments in Kochi.

Conclusion

In summary, the Ready Reckoner Rate (RRR) is a pivotal factor in the Kochi real estate market, serving as a baseline for property prices and influencing stamp duties and registration fees. Understanding this rate is essential for homebuyers, particularly those utilizing loans, as it helps in identifying properties with minimal disparity between the RRR and market rates. This awareness not only aids in avoiding legal complications but also ensures a fair valuation of the property, safeguarding against potential financial losses.

Furthermore, the government plays a crucial role in balancing the RRR to mirror actual market conditions, thereby facilitating revenue generation and promoting legal and transparent property transactions. Overly high RRRs can deter buyers, while extremely low rates may lead to undervaluation issues. Therefore, navigating the nuances of the RRR is key for all real estate market participants in Kochi. Aligning with reputable developers like Varma Homes, known for their transparent practices, can significantly enhance the security and value of real estate investments.