BANGALORE: Planning to buy a plot or flat? Hurry up, for the Karnataka government is set to increase guidance values by 20-30% from November. The revision will push up the minimum price at which a property is sold; consequently, transactions will attract a higher stamp duty and registration charge.
"We have had one round of meetings with stakeholders and are planning to hold two more. We are likely to finalize the new values by the month-end, " said N Prakash, inspector-general of registration and commission er of stamps, Karnataka. Guidance values, an indicator of the government's assessment of the market value of properties, were last revised in August 2013 by around 40%.
On Wednesday , the government issued a gazette notification to revise guidance vilification to revise guidance values. It published the draft of the revised guidance values and said people can give suggestions and feed back within 15 days. "Henceforth, guidance values will be revised annually as we have a permanent central valuation committee comprising officials of key government departments and representatives of industry bodies, "Prakash said. Registration of proper ties is among the top three revenue generators for the state, and the government is keen to tap this revenue source," a senior revenue official said, justifying the hike.
The state treasury received Rs 6,100 crore from stamp duty and registration charges during the last fiscal, and two-third of this came from registration of properties. With new guidance values in place, the government expects to raise an additional Rs 2,000 crore.
The real estate industry is obviously not amused. Realtors said increasing guidance values to bring them on par with market values in one go would scare away prospective buyers, especially from the middle-income group, as properties will become unaffordable.
"This revision is uncalled for. The market is still recovering from last year's sluggish growth. We thought the new government would offer some solace, but it's only coming up with a deterrent," said Vishwa Pratap Desu, vice-president, Brigade Group.
"I am not against increasing guidance values, but am concerned about how it is evaluated. The government doesn't have a scientific way to fix guidance value as it simply goes by the thumb rule of satisfying the state treasury .It would be wise to take the current market situation and bank rates and other factors into consideration, before deriving the guidance value for each area,'' said Prashanth Sambargi of Mars Realty .
However, revenue officials said current market values are about 30-60% higher than guidance values in Bangalore. "We are aiming to bring it to a standard 30%, "a senior officer maintained.
There's a huge difference between the guidance value and market value of property in several areas of Bangalore, as also in other major cities and towns of the state. The central valuation committee has been continuously working to bridge the gap.
On paper, most properties are transacted at the guidance value, while money changes hands at the higher market value.
The guidance value for the stretch from Trinity Circle to CMH Road in Indiranagar is Rs 7,000 per sqft, but the market value is around Rs 22,000 per sqft. Similarly, a square foot of land in Jayamahal Extension remains Rs 10,000, while it is Rs 16,666 in the market.