Will it be castles in air for middle-class?

Will it be castles in air for middle-class?
By R Krishnakumar DH News Service Bangalore:
The upward revision of property guidance values in Bangalore Urban district is expected to hit the industry in the coming years and, more importantly, douse middle-class buyers’ ambitions to own property.

The upward revision of property guidance values in Bangalore Urban district may have unleashed new statistics pointing at a realty boom. However, realtors and experts are skeptical, saying the revision could hit the industry in the coming years and, more importantly, douse middle-class buyers’ ambitions to own property.

The first hit will be taken by middle-class buyers, according to City-based realtors. “There’s this argument that properties continue to be bought and sold, irrespective of the prices. However, there’s a line to be drawn somewhere,” says a real estate agent based at Ramamurthynagar.

Industry expert and advocate S Selvakumar feels the revision could drastically impact middle-class property buyers in the City. “Apart from the stamp duty, the real estate sector is badly hit by a huge additional cost component (25 to 35 per cent of the property’s cost), that includes sales tax, service tax and the Bescom and BWSSB levies.”

Already, apartments are lying vacant because there are no takers and. with the revised values in place, the industry will be left to cater only the rich buyers, says Mr Selvakumar.



Skewed priorities

Industry representatives also contend that the government’s priorities vis-a-vis the revision are misplaced.

“The industry has its own internal pattern of price hikes. The government’s role is to regulate the growth and not keep the prices rising,” Mr Balakrishna Hegde, Karnataka Ownership Apartments Promoters Association (KOAPA) president, told Deccan Herald. Thanks to the revisions, the industry could be “choked at the entry point.”

“Bangalore has its natural advantages and people are willing to invest... but we need to make the environment friendlier,” he says.

However, other sources feel that the decline in registrations would only stay for a couple of months.

“Bangalore real estate, historically, has not been affected by such revisions. Three or four months after the hikes, the registrations are be back on the fast track,” says Roby Narayanaswamy, a realty professional.



Anomalies

He, however, points out that in certain areas, the guidance values are much less than the going market rates. He cites an example: In Cox Town, while the market rate is Rs 7,000 per sq ft, the guidance value is only Rs 1,200.

Mr Selvakumar maintains that the revision process has also led to confusion in the sub-registrar offices.

“Even in areas that have been merged with the Bruhat Bangalore Mahanagara Palike, they’ve persisted with CMC rates”.

Further, SRO officials are not sure which rates to follow. Mr Selvakumar also wants a slab-based system for collection of stamp duty as “this can lessen the burden on middle-class buyers.”



REALTY BITES

*Revised values to hit middle-class buyers

*Some guidance values much less than market rates

*Confusion in sub-registrar offices over new rates

*Govt not regularising growth, feel realtors

*Call for slab-based stamp duty collection