Undervalued properties come under scanner

Undervalued properties come under scanner
S Kushala | TNN

Bangalore: Bangalore city’s property horizon is never calm. The stamps and registration department has discovered that thousands of property owners have cheated the department by undervaluing their properties and registering it for meagre amounts.
With under-valuation of properties and false declaration in registration deeds becoming rampant, the department has started cracking its whip. It has begun issuing notices to building owners/developers who have undervalued their properties during registration. Some 1,000 notices have already been issued for cases from 1997 till date. Owners have been directed to present their documents and pay up amounts corresponding with the market value, said officials.
The market value is always at least 40% higher than the guidance value fixed by the stamps and registration department. Yet the property value declared by owners is invariably much lower than the amount they would have paid the developer.
Residential properties, especially high-end apartments and villas and commercial complexes have come under the scanner of stamps and registration department. According to the rules, documents such as sale deeds, gift deeds, exchange of properties, settlement, reconstitution of partnership, general power of attorney and lease to right come under the ambit of undervaluation department.
“We are expecting recovery of huge amounts through this exercise. Last year, in Gandhinagar zone alone, we recovered Rs 30 lakh from undervalued properties. Since we are also looking at old cases, the pendency levels will come down,’’ explained a district registrar.
Also, the department is looking at cracking false declaration cases where details of additional amenities like club, swimming pool, gym, supermarkets are concealed by the developer in the registration papers to avoid stamp duty on them.
The recovery may run into hundreds of crores, especially with the revision of guidance value, which is on par with the market value.
The officials take up such cases on two counts - cases referred by the sub-registrar to the district registrars and cases taken up suo-moto by the district registrars. Suo-moto cases have to be taken up within two years of the property registration. In both cases, notices are issued to the erring property owners and proceedings are initiated to recover the stamp duty.
How do they identify erring properties? Authorities do a random check of the documents and pick cases where the registered value is abysmally low. Undervaluation cases are rampant in areas such as Gandhinagar, Basavangudi, Jayanagar, Vijaynagar, Bangalore eastern parts - where the housing industry is booming — and in central parts. They issue notices to owners asking them to produce a copy of the original agreement papers between the seller and the buyer. Irregularity can be identified if the amount mentioned in the registered document and the agreement papers differ.
The stamp duty for properties in BBMP limits is 8.4% and for those outside BBMP jurisdiction is 8.5%. The registration fee is one per cent of the declared value.