The State government’s move to cut property guideline value by 33% and increase registration fee to 4% for certain property transactions (like conveyance, exchange, gift, settlement among non-family members) has evoked a lukewarm reaction among property developers and realtors, with many questioning the logic of the move.
“While it is a fact that in many areas the guideline values were found to be higher than the sale price, I don’t think a 33% reduction in guideline value is justified,” Srinivas Acharya, MD, Sundaram BNP Paribas Home Finance, said.
He also warned that the government should now ensure that the 33% reduction is not traded by way of cash, which would completely defeat the objective of reducing cash dealings, and encourage black market dealings.
“With the reduction in guideline value, registrations that were put off or postponed after demonetization will have a positive impetus,” Sarita Hunt, Managing Director — Chennai and Coimbatore – Jones Lang Lasalle, said.
She also said for consumers the acquisition cost will come down marginally as the stamp duty will be paid on guideline value which is lower.
“The government has made this move to increase its revenue. However it is unlikely to have an impact on real estate sentiments or property prices. It might to lead to increase in black transactions. Also the unapproved layouts issue needs to be settled,” said an Chennai-based investment banker who did not wish to be named.
Sanjay Chugh, Founder Skylines Property Consultants, said the cut in guideline value will reduce the gap between the market value and current value of properties in many locations. “The savings on registration cost will rationalise the prices further for buyers. Land prices are bound to become more affordable and attractive for developers and end users'”.
Rajesh Dave, Past President of Chennai Real Estate Agents Association (CREAA), said that the guideline value has to be seen with regard to Chennai market and suburbs. “If you look at Chennai city the guideline value is not in tune with the market value. Prices are unrealistic. This move can be positive for suburbs where the prices and guideline value are low. Overall, this move has its own positives and negatives. On the negative side this could lead to black money generation.”
