Vizag, Tamil Nadu is in a state of transition, with the country’s economy showing signs of picking up.
This is especially true in the real estate sector, which has been hit by the collapse in the global economy and the impact of demonetisation.
In 2016, the state government announced a 100% real estate levy on all properties.
It was meant to generate an extra cash for the government, but instead, the real-estate sector is facing an acute cash crunch.
“We have seen many real estate properties fall in value.
It has also been difficult for us to find suitable properties for purchase.
It is a very sad time for the realty industry,” says A K Srinivasan, managing director of Srinivasa Real Estate, an industry body in Vizgadhapatna.
He said that he had witnessed an increase in the number of distressed properties as a result of the demonetised note ban.
A recent report from the realtor’s association, Kunalakkam, says that the number had risen to 1,082 in March 2017, from 982 in February.
It also said that in 2017, there were 639 such properties in the state, which were registered at the local level.
“It is also not easy to find a suitable property.
It can be difficult to find the right person for a sale.
The only option is to rent,” said Kunalasam.
He also warned that the government’s move to impose a 10% real-property levy in 2018 was an attempt to increase the amount of cash available for the state’s real estate development.
But what exactly is this real estate tax?
According to the realtors’ association, the new tax is expected to generate Rs 1,600 crore for the State government, which is expected towards the construction of housing and the expansion of infrastructure.
However, the government has yet to announce the amount the tax will generate.
“In order to build housing and roads, the local government will be charged Rs 5,000 crore per annum, which will help finance the development of housing, power plants, schools, hospitals, roads, power distribution and other public services.
In order to finance these projects, the central government will have to be credited with Rs 8,000 per annium,” said a report in the Real Estate Association of India (REAI), an industry organisation.
“The total amount of tax is estimated at Rs 1.5 lakh crore,” said Rajeev Chaudhary, president of REAI.
“There is no guarantee that the proposed tax will be fully implemented in 2018,” he added.
The real estate agents’ association says the state will be able to spend the rest of the tax on infrastructure and infrastructure development projects.
However the realts are not happy with the decision to impose the tax, as it will be hard for them to sell their properties.
“These properties are in very bad shape.
It could be more than 5 years before the new properties are sold,” said an agent.
“They are looking at selling the houses in the next two to three months.
It will be difficult for them.
They are in debt.
This will be very bad for us.
Our business is already in trouble.
We have to start paying rent on time,” he said.
Meanwhile, some buyers are also facing problems.
“After the demonoid, it was very difficult to buy property in Vizags.
People were worried about it.
The banks were also concerned about it,” said Anil Gupta, managing partner, Srinavasa Real Property.
“I have had clients who sold their properties in Vizaganas house, and I sold my properties in Madurai too.
It seems like we have been getting a lot of complaints,” said Gupta.
The agents are hopeful that the new real estate taxes will help them in their business.
“Many people are looking for properties in Srinagar, but the banks are not willing to lend money to us,” said Srinasama.
The government’s real-tourism and tourism minister Suresh Prabhu has also announced a new national tour guide and tourism package.
The new package will include an increase of tourism funding for all states and districts, an increase for the National Tourist Authority (NTTA) and a new tourism levy.
However many agents, realtor’s associations and real estate investors are doubtful about this.
“What are they expecting us to do?
The government will impose the real tax on all houses in Vizganas and Madurai, and then charge us to rent the properties in Kanchipuram, and we will not be able go back to Vizag,” said Chaudhari.
The Real Estate Agents’ Association has also voiced concern over the new national tourism package, as the real money collected from the levy will be used to construct a new road for the national highway linking Chennai and Madras. “This is a