BANGALORE : After increasing property guidance values last August, the government is mulling an additional 20 per cent hike. According to officials, the new values might be in force from as early as November.
The move, which might net an additional `2,000 crore for the Stamps and Registration Department, has been criticised by real estate developers, who term it “demoralising” for the just stabilising market.
According to Suresh Hari, secretary of CREDAI Bangalore, the very approach towards calculating guidance values is flawed. “We have been advocating a scientific approach to calculate guidance value. The thumb rule is calculating guidance value at 70 per cent of the market value. It creates an artificial bubble and so an inflationary trend exists in the real estate market,” he said.
Hari also said the calculation does not take into account price correction at any time. As a result of the inflationary trend and the higher stamp duty charges, buyers do not come forward to register.
“What is desirable with increasing guidance value is bringing down stamp duty, which is currently at 5 per cent of property value, to 1-2 per cent,” he said.
CREDAI also highlighted the need to delink registration fees from property values. “Registration fees are normally charged for documentation, which is the same across property types, values and sizes. Then why should registration fees be calculated as a percentage of property value?” Hari asked.
Meanwhile, the government is keen on revising guidance values every year. The difference between guidance values and actual market values is sizable in many areas, with actual prices being `5,000-`10,000 higher.