Karnataka's registration fee hike to hit affordable housing sales

Buyers may have to pay additional Rs 1.5 lakh on purchase of a flat priced at Rs 1-2 crore

Bengaluru: The affordable housing sales are likely to come down further with the state government increasing the property registration fee to 2%. Budget-conscious buyers may delay their purchase plans, according to real estate industry experts.

With this hike, Karnataka now ranks among the states with one of the highest overall property transaction costs. Buyers already pay 5% stamp duty and 0.5% cess, and with the registration fee at 2%, the cumulative burden rises to 7.5%. This makes property purchases in Karnataka more expensive than in several comparable states, potentially impacting competitiveness in attracting both home buyers and investors, said Rakesh Reddy, Director, Aparna Constructions and Estates Private Limited.

“At a time when demand in Karnataka’s housing market has been growing steadily, especially in Bengaluru, this move risks dampening sentiment in the affordable and mid-segment categories where buyers are most price-sensitive. Even a 1% increase on high-value transactions adds a significant burden and may push potential buyers to defer purchase decisions," Reddy said.

While the government coffers will see generous top-ups with higher property registration fees, housing sales may be impacted to some extent - particularly in the affordable housing segment. That said, the overall impact will be minimal because both sales and new launches in this segment have been very limited in the last few years, Prashant Thakur, Executive Director & Head - Research & Advisory, ANAROCK Group told DH.

He said premium and luxury housing segment sales will largely remain unaffected as the target clientele can absorb the added costs more easily.

As per ANAROCK Research, Bengaluru witnessed 12% year-on-year decline in housing sales at 301,120 units in the first half of calendar 2025 as against 34,145 units in the corresponding period last year.

Priyanka Raju, Director, Kalyani Developers, said the recent revision in registration charges will naturally add a marginal cost for homebuyers. While such changes may cause short-term hesitation, the long-term demand for housing in Karnataka-especially Bengaluru-remains strong given the city’s economic growth, employment opportunities, and infrastructure development.

Despite the revision in the property registration system, Karnataka’s overall transaction charges remains below certain key markets like Delhi and Tamil Nadu - where combined levies can reach 10-11%, broadly comparable to Andhra Pradesh and Haryana, said Sunil Pareek, Executive Director, Assetz.

“This revision from the government is aimed to focus on revenue enhancement and broader digitisation push. In a city like Bengaluru, where the average cost of an apartment in an integrated townships is around Rs 1-2 crore - the impact of the fee hike translates to an average of nearly Rs 1.5 lakh upfront. While higher ticket-size buyers may absorb this, a differentiated structure – for example lower slabs for affordable or first-time homebuyers, could prove more effective and ensure inclusivity,” Pareek said.

Bengaluru’s real estate remains robust, supported by IT growth, infrastructure, and long-term appreciation, which outweighs short-term costs. The industry may introduce creative payment plans and schemes to ease this additional burden for customers, Nesara B S, Chairman, Concorde Group, said.

“While this does increase upfront cost, we believe genuine end-users will continue to see value in home ownership. There may be a brief period where buyers factor this change into their financial planning, but demand fundamentals remain strong. In the mid to premium segments, where aspirations drive purchase, the impact will be minimal,” he said.