Brace for property guidance value hike

Property registration charges may go up drastically once the new government is in place as preparations to reassess the guidance value of properties have started at the Department of Stamps and Registrations.

According to sources, the state government has written to the Department of Stamps and Registrations asking officials to start reassessing the rates and submit a detailed report as soon as the new government is in place.

While the guidance value was re-evaluated annually and was increased by an average of 15 per cent, the government had deferred the evaluation since 2019 citing various reasons, including the pandemic.

“Considering that there has not been a revision for close to five years, officials may propose an average of 75 per cent hike in guidance value,” one of the sources said.

This could pinch home buyers’ pockets since registration charges and stamp duty will also go up considerably.

The government levies 3 per cent stamp duty on properties below Rs 45 lakh and 5 per cent charge on others in addition to 1 per cent registration charges and 0.65 per cent cess and surcharge.

In case the revision is approved at 75 per cent, those planning to buy a property worth Rs 1 crore now will have to pay up to Rs 6.65 lakh as registration and stamp duty charges.

This might eventually go up to Rs 11.63 lakh since the property’s guidance value may be increased to Rs 1.75 crore.

Industry experts opined that the government and the department need to go slow on the proposal since the real estate sector was just recuperating after the pandemic. “Housing loan rates have already gone up and an increase in guidance value and subsequent increase in stamp duty will definitely bring down sales,” said Ramesh K, a property consultant.

Suresh Hari, chairperson, CREDAI Bengaluru, said the government’s 10 per cent concession had received an overwhelming response and shows that a rise will only hinder progress. “Buyers will think multiple times before investing. We have been insisting that the government bring down stamp duty. Since it is only a fee levied like a service charge, we do not know why it has to be calculated on the basis of guidance value,” he said.

Sources opined that the government had deliberately delayed the revision process and this has affected revenue collection. “There has been a drastic improvement in the number of registrations post Covid. Had the government revised the guidance value periodically, revenue collection would have been healthy during this period,” an official said.