Understanding Circle Rate and Market Rate


The real estate sector uses a lot of jargons and among them the most popular ones are circle rate and market rate. So, before you go ahead and invest in a property, it is important that you know about both these rates in order to make a more informed decision.

About Circle Rate

This is the minimum value at which the sale or transfer of a built-up house, plot, flat or a commercial property should take place. The circle rate is usually fixed either by the local development authorities or by the revenue department of the state government. It is important to note that the circle rates can differ within different localities in the same city. The circle rates are set because the real estate market is obscure and does not offer a precise price index, so it helps in putting a check on speculation of property costs.

Usually, the circle rates are lesser than the market rates across the country as circle rates are not revised often. Therefore it can be said that with the circle rate you will not get to know the correct property prices.

About Market Rate

On the other hand, market rate is basically the price that the buyer pays to own the property. The market rate is set by finding out the real transaction prices in a place and is a better way to understand the expectations of the sellers and the amount that the buyers are willing to pay. Since, these prices are based on the demand and supply, property in an area with high demand but low supply will certainly have higher prices when compared to other areas.

Even though both the market rates and circle rates are linked, they do not have that much influence on each other. The market rate is always higher than the circle rate but a considerably higher difference between them may indicate a lag between the authority’s view and market performance.

Importance of circle rates for home buyers

It is important for the home buyers to check the difference between circle rate and market rate as a lesser difference is always advantageous for those who are receiving the finances via a home loan. Moreover, as the sales deed is closer to circle rates, the sanctioned loan amount of the property will be more genuine for buyers.

What can be done if the circle rates are higher than market rates?

Even though; this is not at all possible, but still if it occurs then there are three options available for the buyers:

  • The buyer can declare that market value is equal to circle rate but this can be a risky thing in case the Income Tax official gets to know about the transaction.
  • The buyer can pay registration charges and stamp duty on circle rate; however, this can result in huge financial losses.
  • The buyer can make an appeal to sub-registrar so that he can pay the charges at market rate instead of circle rates. Although this is one of the best options for the buyer but it is an extremely time-taking process and if the property is bought on home loan then banks normally do not prefer postponements in sales deed registration.

So, before you go ahead and understand the property rates in Ghaziabad at NH 24 for buying a property, make sure that you understand the details about circle rate and market rate.

(Source: https://wavecitytownshipghaziabad.wordpress.com/2017/09/28/understanding-circle-rate-and-market-rate/)

Leave a Reply

Your email address will not be published. Required fields are marked *

Solve : *
22 + 28 =