Karnataka Moots Up To 25% Hike In Guidance Value; Affordable Housing Takes A Beating
Rates of property are likely to go up in capital Bengaluru as the Karnataka government is planning to increase the guidance value of properties by up to 25 per cent. The revised rates, in the range of five and 25 per cent, will be effective from December 26, tentatively.
Officials suggest that the aim behind the move is to bring about parity between market value and the guidance value set by the government. The government expects to raise anywhere between Rs 1,000-1,500 crore from the hike that could be used to help waive farmers’ loans.
Guidance value is the minimum value set by the government below which a property cannot be registered. Revenue brought in through registration and transfer of property forms the main source of funds for the state government and these are revised from time to time. The last revision in Karnataka was implemented in 2016.
How will it impact property prices?
Rates of property would go up significantly in Bengaluru, a property market which is already counted among the most expensive ones in India.
For instance, existing rate of property in Indiranagar 100ft Road is Rs 169,300 per square metre (sqmt), based on guidance value. (A sqmt is equal to 10.76 sqft.) If you have a 100-sqmt (1,076-sqft) house in Indiranagar’s 100ft Road, the guidance value is Rs 16.93 lakh as per existing value. The proposed hike would mean a significant increase in cost.
Homebuyers would end up paying more as stamp duty and registration charges for areas where the guidance value is higher than the market price.
If a property is sold for Rs 1 crore based on its guidance value and the stamp duty is charged at 5.6 per cent, your stamp duty comes to Rs 5.60 lakh.
However, some realtors have also claimed that while the intent in bringing about this change may be good, the timing is not right as homebuyers buying a property will have to reserve a higher budget.
Impact on localities
Areas outside the central business districts (CBD) would be most impacted while rates within the CBD such as MG Road, Cunningham Road and UB City are more or less unchanged.
The steepest hike would be seen in Mysuru and Mangaluru, reports confirm. Besides, owing to commercial transactions, areas such as Jayanagar, Malleswaram, Koramangala, Sanjaynagar, RT Nagar and JP Nagar will see a sharp increase in guidance value.
Areas such Hebbal, Nelamangala and Chikkaballapur will see 20 per cent hike in rates since there was a gap of 200-300 per cent between the transaction value and the guidance value of properties in these localities, Inspector-General of Registration and Commissioner of Stamps K V Thrilok Chandra. Jayanagar had said earlier this year.
However, underdeveloped areas where commercial growth is not sizeable will not be hit by the hike.
“We have not proposed guidance value enhancement in parts of old Bengaluru like Akkipet populated by low and middle-income families,” Chandra had told media.
Whatever said and done, affordable housing is sure to take a beating as mid-income families especially those who were keen to invest in and around farmlands on the outskirts or even highways in Bengaluru, Mysuru, Hubballi-Dharwad and Mangaluru.