State revenue minister R Ashoka announced on April 21 that the Karnataka government has decided to slash the property guidance value across the state by 10 percent for another three months from April 25 to July 24. This, say market experts, provides relief to homebuyers.
“As there is demand from the people, it has been decided to slash the guidance value for another three months between April 25 and July 24 by 10 percent. This will be applicable for sale and purchase of all kinds of properties. Orders are being issued in this regard after discussions with Chief Minister Basavaraj Bommai,” Ashoka said.
The guidance value is the minimum selling price fixed by the government on property depending on the locality and type of structure.
Many lauded the move. “The decision to slash guidance value for another three months between April 25 and July 24, 2022, is a welcome respite for many homebuyers especially since residential demand has remained high post the pandemic. It is good because property prices are already heading north amid the rising inflationary trends of construction materials and any other additional increase including guidance value (which would have increased the registration cost) would hurt buyers and thus impact housing sales,” said Anuj Puri, chairman of real estate consulting company ANAROCK.
Buoyant housing sales also have positive implications for government coffers. As per ANAROCK Research, Bengaluru witnessed housing sales of nearly 13,450 units in the first quarter of 2022, up 55 percent on a yearly basis and 9 percent on a quarterly basis, Puri said.
Sathish Kumar M, president, NAREDCO (National Real Estate Development Council) Karnataka, told Moneycontrol that this step in principle is a welcome one and will motivate people to complete their transaction as early as possible. In the past, from January-March, whenever the incentive was given, there was a rise in the sales numbers.
However, guidance value per se is on the higher side. The government has reduced the stamp duty on the guidance value but if it reduces the guidance value it will be more appropriate, Kumar said, adding that it should be brought down by at least 5-10 percent.
On their part, homebuyers said the cut in property guidance value will not help them. The government should try and restore the level of trust among homebuyers due to the poor enforcement of the Real Estate (Regulation and Development) Act and encourage them to invest in the property market, said M S Shankar, general secretary, Forum for People’s Collective Efforts, a group of homebuyers across the country. It should call for a joint meeting with all stakeholders, he added.
Kumar of NAREDCO Karnataka said that in some areas where the guidance value is on the higher side, transactions are not taking place. Also, the government should look at regularising property titles so that there are fewer litigations, he suggested. “We are planning to file a PIL (public interest litigation) for title certification on behalf of NAREDCO soon,” he added.