friends
news article from today's Times paper just FYI. Any impact of this on RE prices?
Article link below
http://timesofindia.indiatimes.com/NEWS ... 832181.cms
Ar=rticle extract
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Land-use fee goes through the ceiling
BANGALORE: Take a deep breath, here comes a shocker. Property buyers and land and layout developers will have to pay a very steep fee for change of
land use and layout approvals. The government had on June 30 published the draft rules to amend the Karnataka Planning Authorities Rules, which have fixed the fee based on a percentage of guidance value.
What was Rs 75 per sqm for change of land use in Bangalore from residential to commercial is now 18% of the guidance value of total land area. Similarly, the Rs 40/sqm being paid for change of land use to industrial has been revised to 17% of the guidance value of total land.
Strangely, the draft notification has not been publicized by the authorities, who have called for objections/suggestions within 30 days.
Earlier, the change of land use fee was based on the population and varied from gram panchayats, CMCs, TMC and corporations. Now, with the new amendments, the rates are based on a percentage of guidance value.
The amendment to Section 18 (i) reads: “At the rates equal to such percentage of the value of the building determined on the basis of guidance value notified under the Karnataka Stamp Act, in the case of permission for change in use of land or approval of layout.’’
According to town planners, the revised fee will have an adverse impact on the already-shaky realty sector. “Layout sanction fee may go up manifold, thanks to the percentage rate. This is going to have a negative impact on the industry,’’ they explained.
Karnataka Township Developers’ Association general secretary C J Roy told TOI this move will hit the realty sector which is showing signs of recovering from economic slowdown. “The impact will be harsh and the developers will be forced to pass on the additional burden to the customers,’’ he said.
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Regards
PC
Land-use fee goes through the ceiling=>news -Any impact?
Re: Land-use fee goes through the ceiling=>news -Any impact?
Hi Plotcrazy
Isnn't this only for conversion from residential to commercial\indusctrial?
reg
Avian
Isnn't this only for conversion from residential to commercial\indusctrial?
reg
Avian
Re: Land-use fee goes through the ceiling=>news -Any impact?
It looks like it is for converting the Agricultural land or converting a residential plot to commercial purpose etc. At present it doesn't impact anyone. as no developers are investing in purchasing new land and going for conversions. At the same time conversion of residentail to commercial is also going on need basis. Medium to long term impact is, It will slow down further the real estate growth as it pushes the prices further and deteriorates the interests of the buyers.
there is an article in economic times today that in certial Ring road areas, the land prices have gone below the Govt Guidance Value. the Real estate developers need to do a lot in terms of pricing, transparency, Quality construction, healthy margin, to bring back their customers. Not just blaming the governemtn to reduce the Duties, Intereste Rates, Guidance Valuess..etc
there is an article in economic times today that in certial Ring road areas, the land prices have gone below the Govt Guidance Value. the Real estate developers need to do a lot in terms of pricing, transparency, Quality construction, healthy margin, to bring back their customers. Not just blaming the governemtn to reduce the Duties, Intereste Rates, Guidance Valuess..etc
Re: Land-use fee goes through the ceiling=>news -Any impact?
Bangalore periphery realty prices slip below guidance value
http://economictimes.indiatimes.com/Mar ... 832357.cms
BANGALORE: Bangalore’s realty market has thrown up a queer problem with property prices in peripheral areas falling below the guidance value set by
the government.
While buyers pick up property at prevailing (lower) market rates, they are having to cough up higher stamp duty for registration. This is because stamp duty is calculated on the guidance value set for each area/property.
“There could be strong case for downward revision of guidance value in peripheral areas,†says K R Niranjan, inspector general of registration and commissioner of stamps in Karnataka. Typically, the government conducts a valuation exercise around October every year and issues fresh guidance values based on property price trends.
If prices continue to be south-bound, the state will have to look at aligning the value to prevailing rates and this could well be the first downward revision in Bangalore. Instead of an annual revision, B S Shankaranarayanan, a legal expert in the realty sector, suggests timely and periodic revision of guidance values based on property price movements.
“This will help the public in cases where there is a price decline and enable the government to mop up more when prices go up,†he adds. And, like a builder in the Yelahanka suburb says, this is as good a time as any to bring about a correction in guidance value.
In a particular instance relating to Devanahalli, which witnessed a steep spurt in prices, given its proximity to the new airport, the value was revised during the year, a state government official says.
Requests seeking downward revision have started trickling in with buyers of the Prestige Shantiniketan project in Whitefield and builder ETA (for The Gardens project on Magadi Road) approaching the department.
The guidance value of Prestige Shantiniketan project is 3,200 per sq feet while it is Rs 4,200 per sq feet for ETA and hence, stamp duty would be calculated on these rates. But, realty sources quote the prevailing basic market rate for ETA at Rs 3,400 per sq feet while prices in Whitefield, where Shantiniketan is located, have suffered a very sharp decline of even up to 30%.
Typically, the guidance value is pegged approximately 20% to 40% below market prices to allow for escalation during the year. In the last three revisions, there has only been an upward revision of the guidance value. In fact, in April 2007, the revision was in the range of 100% to 300%, mirroring the realty boom. But, a builder says, the government hiked the rates when the market had already peaked out, marking the beginning of the downward curve.
Much of that has translated into money in the government’s coffers over the last three years when the state collected as much as Rs 3,630 crore in 2007-08. Now, the chief cash cow department is staring at a huge shortfall in collections in 2009-10 compared to a target of Rs 3,300 crore. In 2009-10, the stamp duty collections plunged to Rs 3,100 crore, necessitating a cut stamp duty from 7.5% to 6% to lift buying sentiment.
But, the new dampener seems to be guidance value, which is estimated based on various parameters such as nature of property (site, corner plot, flat and so on), location and specifications of the building complex. The state government valuation committee, which normally takes three months to carry out the exercise, has representatives from the town planning department, BDA, income-tax, city corporation, public works and irrigation department and Institute of Chartered Valuers.
http://economictimes.indiatimes.com/Mar ... 832357.cms
BANGALORE: Bangalore’s realty market has thrown up a queer problem with property prices in peripheral areas falling below the guidance value set by
the government.
While buyers pick up property at prevailing (lower) market rates, they are having to cough up higher stamp duty for registration. This is because stamp duty is calculated on the guidance value set for each area/property.
“There could be strong case for downward revision of guidance value in peripheral areas,†says K R Niranjan, inspector general of registration and commissioner of stamps in Karnataka. Typically, the government conducts a valuation exercise around October every year and issues fresh guidance values based on property price trends.
If prices continue to be south-bound, the state will have to look at aligning the value to prevailing rates and this could well be the first downward revision in Bangalore. Instead of an annual revision, B S Shankaranarayanan, a legal expert in the realty sector, suggests timely and periodic revision of guidance values based on property price movements.
“This will help the public in cases where there is a price decline and enable the government to mop up more when prices go up,†he adds. And, like a builder in the Yelahanka suburb says, this is as good a time as any to bring about a correction in guidance value.
In a particular instance relating to Devanahalli, which witnessed a steep spurt in prices, given its proximity to the new airport, the value was revised during the year, a state government official says.
Requests seeking downward revision have started trickling in with buyers of the Prestige Shantiniketan project in Whitefield and builder ETA (for The Gardens project on Magadi Road) approaching the department.
The guidance value of Prestige Shantiniketan project is 3,200 per sq feet while it is Rs 4,200 per sq feet for ETA and hence, stamp duty would be calculated on these rates. But, realty sources quote the prevailing basic market rate for ETA at Rs 3,400 per sq feet while prices in Whitefield, where Shantiniketan is located, have suffered a very sharp decline of even up to 30%.
Typically, the guidance value is pegged approximately 20% to 40% below market prices to allow for escalation during the year. In the last three revisions, there has only been an upward revision of the guidance value. In fact, in April 2007, the revision was in the range of 100% to 300%, mirroring the realty boom. But, a builder says, the government hiked the rates when the market had already peaked out, marking the beginning of the downward curve.
Much of that has translated into money in the government’s coffers over the last three years when the state collected as much as Rs 3,630 crore in 2007-08. Now, the chief cash cow department is staring at a huge shortfall in collections in 2009-10 compared to a target of Rs 3,300 crore. In 2009-10, the stamp duty collections plunged to Rs 3,100 crore, necessitating a cut stamp duty from 7.5% to 6% to lift buying sentiment.
But, the new dampener seems to be guidance value, which is estimated based on various parameters such as nature of property (site, corner plot, flat and so on), location and specifications of the building complex. The state government valuation committee, which normally takes three months to carry out the exercise, has representatives from the town planning department, BDA, income-tax, city corporation, public works and irrigation department and Institute of Chartered Valuers.