K'taka contemplates 30% surge in real estate guidance value

NT Correspondent

Bengaluru: Rumours are circulating within Bengaluru's real estate sector, suggesting that the Karnataka government may significantly increase the real estate guidance value by 30% starting October 1.

It is anticipated that a model guidance value table will soon be released for public input before final rates are officially implemented on October 1.

After the implementation of new rates, the state government expects to generate higher revenue from property registrations for a limited six-month period ending March 2024.

The guidance value represents the minimum value assigned to any piece of land and serves as a benchmark, ensuring that no land transaction can be registered at a rate below this value.

By establishing a guidance value, the chances of undervaluing property transactions are greatly reduced, thus curbing the generation of black money.

Why?

The primary reason behind proposing this guidance value increase is the Karnataka government's desire to generate additional revenue as part of its commitment to implementing its five guarantees, which were promised in advance of the Karnataka assembly polls in 2023.

Chief Minister Siddaramaiah, who also serves as Karnataka's finance minister, had mentioned raising the guidance value during his budget speech in July.

Potential Impact

An increase in guidance value is expected to drive up the cost of new apartments and plots, particularly for individuals interested in purchasing residential properties in Bengaluru.

Will it be uniform or graded?

There may be debates about whether the government will implement a uniform rate or a graded hike in guidance values. If current speculations are accurate, the government seems inclined toward a single, flat rate increase in guidance values.

Data reveals that a 30% increase in guidance value would be the most substantial since 2013 when it was last raised by the same percentage. There were no adjustments in guidance value in 2015, 2017, and 2020. In 2021 and 2022, the guidance value experienced a more modest 10% increase.