Bengaluru Jan 19, 2022: The Karnataka government has announced a reduction in property guidance value by 10% for 3 months wef Jan 1, 2022. This will give a further boost to the real estate sector which had already started picking up in 2021. Home buying has been seeing a surge despite the second wave as the sector started improving by leaps and bounds since June last year.
In the last 6 months, the state government has earned Rs 7000 crore which is nearly double of pre-Covid times. Also, it is nearly 76% of the revenue target for the department of stamps and registration which has a target of Rs. 12,665 crores for this fiscal. Out of this Rs 7000 crore, around 60% revenue comes from Bengaluru and Mysuru.
Due to the pandemic the government had not revised the revenue target from 2020-21 since the real estate industry was affected due to the pandemic in 2020. To boost the sector, the government had reduced stamp duty from 5% to 3% for properties under Rs 45 lakhs and introduced e-aasthi for online registration of properties. This gave a huge fillip to the sector. Now with the announcement of reduction in guidance value, the government is hoping the sector will see further boom.
Real estate sector reacts
The real estate sector has welcomed the reduction in guidance value. However, the window of 3 months for the reduction is too less, feel real estate developers and experts.
“It’s certainly a good move to encourage buyers as it would also save them some money. However, instead of 3 months, it would have been good to extend for a year as the pandemic is extended and the economy is still struggling,” advises Dr Prashanth Reddy, Chairman, Real Estate Expert Committee, BCIC.
“Many who need to travel for their asset registration will find it a challenge. Also new buyers will take time to freeze their sale and some take a few months to close their payments. The reduction should be available for a reasonable period of time, perhaps minimum of 12 months,” concurs Suresh Hari, Chairman-CREDAI Bengaluru.
“The change in the guidance value is primarily applicable on the available stock of residential and commercial buildings which has already obtained the Occupancy Certificate. This must ideally be extended up to December 2022 to realize the true benefit of this change as this is when many more projects would have obtained OC. Such extension will increase the quantum of fixed residential and commercial projects that are eligible to avail the benefit of this revision in guidance value,” feels C N Govindaraju, Chairman & Managing Director, Vaishnavi Group.
“Further, this will motivate the developer to complete projects sooner and obtain OC. This in turn will be an incentive for prospective customers to invest in such projects and move the unsold inventory. This will aid the government in higher revenue collection in terms of stamp duty,” adds Govindaraju.