Govt planning to infuse buoyancy into real estate market in old CMC areas
With real estate market witnessing a slowdown in Bangalore for the last one year, the State Government is now contemplating a downward revision of guidance value of land on the outskirts of Bangalore City.
The Stamps and Registration Department is expecting a shortfall of nearly Rs 1,000 crore in its revenue collection in 2009-10. The target for the fiscal is Rs 3,566.62 crore and up to November-end the collection was just Rs 1,671.42 crore. The present average collection a month is Rs 250 crore.
K R Niranjan, Inspector General of Registration & Commissioner of Stamps, said immovable property purchase activity reduced from 2007-08 and last year registered a negative growth (-13.37%). The trend will continue this year and for the next one year also following the global recession.
He said, “Following the sales of apartments coming down in the capital, we though that property developers would be slashing the prices at least by 15 to 20 pc. But that has not happened. Despite the sluggish growth, leaders in real estate market are neither into distress sale of sites/apartments nor reducing the prices. They are continuing to hold on to their properties. In the current year budget we reduced stamp duty for property registration by 1.5 pc though it made us lose about Rs 400 crore revenue. Still there is stagnation. Now the only option for us is to bring down the guidance value in the erstwhile CMC areas around Bangalore City.”
Not in B’lore City
The officer said there is no question of reducing the land guidance value in the central Bangalore areas because there is hardly any transaction happening here due to non-availability of land/houses. But in the outskirts like Yelahanka, Whitefield, Electronic City and Mahadevepura, a good number of apartments have come up.
“In these areas we may have a re-look into the guidance value. May be 10 - 20 pc could be reduced. The general impression is that the guidance value fixed by the government is about 40 to 50 pc lesser than the market value. But in old areas like Jayanagar,
Basavanagudi and M G Road the guidance value is on par with market rates. Properties will not be registered for less than the guidance value,” the officer said.
Niranjan said the guidance values are fixed by the Central Valuation Committee which has a host of members. Niranjan himself is the chairman. The panel may hold its meeting in next January where the revision would be discussed.
He also pointed out that in the recent years the guidance value had not been reduced in Bangalore. But with the suggestion by district authorities, the guidance value was recently increased in seven districts - Gulbarga, Bidar, Chitradurga, Davangere, Koppal, Hassan and Shimoga. The guidance value between Devanahalli and Ckikballapur corridor was increased by 50 pc.
Asked whether there would be any other measure to create buoyancy in housing sector, Niranjan said, “We can think of reducing stamp duty on various agreements drawn during transaction or purchase of properties. But all decisions will have to be taken by the Central Valuation Committee.”
The Department of Stamps & Registration intends to commission a study by an independent body to prepare a report on recent trends in the property transactions in the State. A proposal to this effect is pending before the finance department.
The study could include the factors responsible for slowdown of transactions of immovable properties especially apartments and commercial complexes; identifying bottlenecks affecting the registration of properties; best policies which could be adopted and innovative methods to motivate people to go in for registration of documents are among others.
* Revenue collection shortfall in 2009-10 to be nearly Rs 1,000 crore
* Immovable property purchase activity registers a negative growth of 13.37% last year
* Despite the sluggish growth, there is no signs of distress sale of sites/apartments
* No question of reducing land guidance value in central Bangalore areas
* Central Valuation Committee likely to meet in next January where the revision of guidance value would be discussed