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Karnataka government’s proposal to cut guidance value lifts mood in property market Last week, revenue minister R Ashoka said that the government was considering revising the guidance value by December and that any decrease would be implemented across Karnataka, barring industrial zones and areas along highways. Discussions in the state government about reducing the guidance value of properties have heartened developers and would-be homebuyers, providing further momentum to the real estate sector that’s showing signs of recovery after the second wave of Covid-19. Last week, revenue minister R Ashoka said that the government was considering revising the guidance value by December and that any decrease would be implemented across Karnataka, barring industrial zones and areas along highways. Guidance value is the minimum selling price of a property. The government fixes it based on the locality and type of structure. A downward revision will bring down property prices. As per the norms, the government is supposed to revise the value every year. In January 2019, it announced a hike in the range of 5 to 24 per cent. “The guidance value could not be revised in 2020 because of the pandemic. As the government wants to take it up this year, we have initiated the process,” said KP Mohanraj, inspector general of registration and commissioner of stamps. There have long been demands to cut the rates, which are very high in some areas and inflate property prices. For instance, the guidance value of a property on MG Road is more than Rs 1.9 lakh per square metre. On Lavelle Road, it is Rs 2 lakh per square metre. Representatives of the real estate sector said that because of the Covid-linked slowdown, certain properties were being undervalued and sold. “While we welcome the government’s plans to decrease the guidance value, we hope it will consider the ground reality before finalising the rates,” said Suresh Hari, chairman of CREDAI-Bengaluru. He added that property sales had reached 30 per cent of the pre-Covid level. There will be a knock-on effect on property tax if the guidance value is reduced. “The news has added to the positive mood, especially after the recent property tax muddle caused by BBMP’s flawed zonal classification. The government should also consider slashing stamp duty on registration of properties across price bands,” said MS Shankar, the general secretary of the Forum for People’s Collective Efforts. Revenue booster Lower guidance value is expected to increase the number of property registrations, which, in turn, will push the government’s revenue up. In August, more than 2.1 lakh documents were registered, fetching revenue of Rs 1,142 crore as against Rs 969 crore (1.7 lakh documents) in 2020 and Rs 911 crore (1.7 lakh documents) in 2019.

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