Guidance value to rise 10-30% from October

Posted on Oct 10 2015 - 4:54pm by IBC News Bureau

Be prepared for some ripples in the realty sector. The government is planning to hike guidance value by 10-30% across the city in October first week. Guidance value is the minimum valuation at which properties must be registered with the government.

While this may trigger a rise in property prices, experts believe it will also regularize the market by cutting down the black money component in transactions.

For example, a 1,800 sq ft three-bedroom flat in %Yelahanka has a price tag of Rs 30 lakh (according to the last guidance value), but its market value is Rs 45 lakh.

After revision, the official value would be Rs 35 lakh and the market value Rs 47 lakh since sellers tend to hike prices after every revision in guidance value. So, a buyer has to register his/her flat at Rs 35 lakh and pay the sel ler Rs 2 lakh more.
Cost will Escalate, buyers will suffer
This is a highly negative approach. The cost of projects will further rise and buyers will suffer when housing for all by 2022 is the aim of Modi government, such increases will only cause heartburn.Mr Suresh Hari / Secretary,CREDAI BENGALURU

But some beg to differ.

“Guidance value brings mo8re sanity in property values. The revision primarily captures the trends in market transactions to reflect true value. Generally before the revision, buyers rush for registrations to get the benefit and soon after there is a lull. Then the market reconciles to the new values and transactions pick up,” said Mr Om Ahuja, CEO (residential), Brigade Group.

In November 2014, the hike in guidance value was 20-200% and this year, 10-30% as it is now an annual affair. The revenue department hopes to meet its tar get of Rs 8,200 crore. A senior revenue official said, “Property owners might actually benefit as banks generally give loan going by guidance value.”
Response from Mr.Jai Singh, Senior Vice President, Sales and Marketing
The rise in guidance value will have a direct impact on registration value which will hike up the total price of the property. It will affect the sales pace. Most importantly it is going to affect the buyers’ sentiments to a greater extent.Majorly South and South East Bangalore have the highest fast moving properties. Sales movement will get effected in these locations to a greater extent.
Response from Mr.Rohit Sringeri, Founder Director, Maysons Realty
The increase in guidance value will put an increased burden on the buyer. The registration and stamp duty on a residential unit is calculated on the guidance value of the property. So now the buyer will end up paying more registration and stamp duty. Overall the impact on real estate industry will not be much as real estate market is driven by market value of the property and not the guidance value.