Guidance value set to plunge 25%

Guidance value set to plunge 25%

Tardy Realty Forces Govt Hand

S Kushala & Anshul Dhamija | TNN


Bangalore: Your dream house may get cheaper. The guidance value is set to go south with a revision ranging from 20% to 25%. To encourage property buyers to buy and register properties, the stamps and registration department has taken up this revision. “The exercise will take place after e l e c t i o n s, ’ ’ sources said.
The meltdown has impacted the revenues of stamps and registration department: people are dithering to invest in property, and property owners, on their part, are holding back registrations due to high guidance value that results in high stamp duty.
The revision exercise started two months ago. Though property values had dropped in city areas, it’s worse in the periphery. So much so the market rates have gone below guidance value. For instance, agriculture land in outer areas is Rs 25 lakh per acre as per government rate, but market value has crashed to a low of Rs 7 lakh.
Normally, there is a 40% difference between property rates fixed by government value and market value. With recession and crash in realty sector, the
gap has been reduced to about 20% in BBMP limits.
For example, when revision comes into effect, for a 1,200-sqft, two-bedroom apartment with a guidance value of Rs 3,000 per sqft, stamp duty charges and registration would add up to Rs 2,77,920. Considering a 20% reduction in the value at Rs 2,400, stamp duty charges would be Rs 2,22,336. That’s a saving of Rs 55,584.
“During boom, government raised guidance values. Today when prices have fallen by 5%- 20%, there must be a downward revision,” says Balakrishna Hegde, former president, CREDAI Karnataka.