In a major relief to homebuyers, the state government has decided not to hike guidance value of properties across Karnataka until 2021. The guidance value of properties was revised by 5% to 25% in January last year.
Guidance value — the base price of properties in a particular area, fixed by the government — is the minimum amount at which the sale or transfer of properties takes place. Property registrations cannot be done for an amount lower than the guidance value, and therefore, is a major revenue source for the state.
A senior official said the government decided against hiking the guidance value after going through real estate surveys. “We have decided to hike the values only once in two or three years,” said K V Trilok Chandra, inspector general of registrations (IGR) and commissioner of stamps.
The government had earlier formed a Central Valuation Committee (CVC) to revise the guidance value annually. The committee meets in November and ensures that the new guidance value comes into force from January 1. “We have been doing good on revenue collection,” Chandra added.
Developers welcome govt’s decision, but seek value cut
Though real estate insiders believe that the decision comes in the wake of the slump in real estate sector owing to the global slowdown, revenue officials sought to paint a different picture.
As on December, 2019, the stamps and registration department had mopped up Rs 8,297 crore, an increase of Rs 650 crore over the set revenue target. “This is another indicator that the market is improving and to keep the momentum going, it is necessary that we don’t increase the guidance value,” said Chandra.
In 2019-20, the government has set a target of Rs 11,828 crore. “An analysis of sale deed executed in 2019-20 showed that real estate was on the path to recovery. We are confident of exceeding the target this year too,” he said. The industry too has welcomed the government’s move. Suresh Hari, chairman of CREDAI, Bengaluru, said it was actually expected that the guidance value would be slashed. “But the decision of not hiking the guidance value will go a long way in restoring balance in real estate sector, which had gone awry due to skewed values. It should be slashed so that property becomes affordable,” he said.
Rajendra Joshi, CEO Residential, Brigade Group, termed the government’s decision a favourable move: “It would be better if the guidance value is reduced. This will help developers more in reducing the cost.” Another top developer said: “Despite the government setting a goal of providing affordable housing to every individual by 2022, there is no visible sign of a realty boom. Lowering the guidance value will reduce the cost of commercial and residential plots.”