About Home Shikari
Opinions divided
- The Hindu(Habitat), August 17, 2013
Experts share their views on the revised guidance value with RANJANI GOVIND
The State government has in its official website www.karunadu.gov.in posted the revised guidance value of immovable property under all sub-registrar offices in the city. While there are interesting facts to be noticed like the guidance value at Infantry Road steeply rising to being higher than some of the busiest areas in the CBD, the most pricey seems to be the UB Towers followed by Raj Bhavan Road, Commercial Street and Sankey Road. The new market-based guidance value for property registration that came into effect last Monday has the revised chart untouched in some areas while it is 30 to 50 per cent higher in most areas, even as some are seeing a 100 per cent augment.
UB Towers has an astronomical Rs. 20,150 and Rs. 20,350 per sq. ft as its guideline value, and the outskirts of Bangalore North taluk cost about one per cent of that - Rs. 250 per sq. ft, making them the cheapest in the current revision. The revision is expected to increase the government's revenue by Rs. 1,500 crore with the registration of houses and villas in the gated neighbourhoods included for the first time. The revision is significant, as nearly 50 per cent of the total revenue through registration fee (one per cent) and stamp duty/surcharge/cess (6.65 to 6.75 per cent) comes from the city. While the government collected Rs. 5,265.44 crore during 2012-13, it has set a target of Rs. 6,500 crore for the current year.
An industry expert was also of the opinion that while any move towards transparency is welcome, the government should consider a parallel decrease in stamp duty and registration cost for "real estate market will continue to grow without affecting State revenues."
Experts speak
"The timing of the revision is definitely not right due to overall slowdown of the global economy," said Vestian Asia-Pacific CEO Shrinivas Rao. "With the economic slowdown, currency crisis and poor results of the software sector, the realty sector has already seen a slowdown in the last quarter. The revised guidance values are bound to add more financial burden to the buyers, which will have a greater impact on the sale of residential property."
But there are industry people hailing it for the transparency it could bring in. Says Sachin Sandhir, MD, RICS South Asia, "Even as guidance values have been revised upwards, the prices at which property are being registered continue to remain below the actual market value and provide scope for the absorption of unaccounted money in property transactions. Therefore, increase in guidance values can help bring about a greater degree of transparency in the market. While the total sales price will increase marginally with the upward revision in these values, it is likely that the impact on the consumer will be negligible. Therefore, it is unlikely that genuine buyers will defer property purchase as a consequence of the upward revision."
Pravin Malkani, MD of Patel Realty, feels this is not the right time for these modifications. "The exercise could have been avoided due to the low phase of the current economy. South Bangalore is hiked by seven to 15 per cent as opposed to many witnessing an increase of 40 per cent. This revision will now render South Bangalore property more appealing as it is already home to some of Bangalore's best property with a close proximity to IT hubs. Potential home buyers will now find this location more attractive and desirable as they can get the benefit of paying less tax too."
In the long run, a regular correction of guideline values in tune with market rates will help improve the transparency in the market and reduce gross under-reporting, feels Sunder P., CEO, HomeShikari. "In the short term, there is going to be a fall in registrations. A similar exercise in Tamil Nadu in 2012 led to a 20 per cent dip in registrations in the immediate quarter, and so one can expect the same here too."
Sundar, however, is hopeful that speculative buying will decrease while the number of genuine home buyers will increase. "The Bangalore market is reasonably priced when compared to most other major cities, so the impact may only have a temporary effect. As long as the guideline values are being calculated on a scientific basis and don't exceed the market price of the property in any given locality, genuine buyers will continue to buy homes, and the exchequer will benefit. In the short term, builders will have to increasingly look at NRI markets, given the rupee appreciation as well as the fact that this is the only segment that is unaffected by an increase in guideline values."
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