Property prices in Bangalore are expected to rise 25-30% from October 1 this year. The Karnataka government’s latest revision of guidance rates is responsible for the upcoming spike in the rates of immovable properties in Bangalore. This is the first time in the last 5 years that the state’s guidance values are being updated.
Life in Bangalore is already expensive. With high rates, rents and living costs, the housing scenario in Bangalore is always a central point of discussion. The government’s latest updates regarding revisions came on the 19th of September.
What Is Guidance Value?
Guidance Value, set by the state government, refers to the minimum selling price of a property in a particular area. Property transactions in that area cannot go below this set value. In recent years, properties in Bangalore are reportedly being sold at rates much higher than those set by the government.
For example, Karnataka’s revenue minister Krishna Byre Gowda mentioned, “…If the guidance value for properties along the national highways was around Rs 5 lakh to Rs 10 lakh per acre, the market price was more than Rs 10 crore”, highlighting the widening gap between the two values. Therefore, the recent revisions aim to clamp down on corruption in the city’s real estate sector while increasing the state government’s annual revenue.
Karanataka’s revenue minister Krishna Byre Gowda
Source: deccanherald
“The registration department should revise the guidance value every year as per law. However, the guidance values have not been revised for the last five years. On average, the increase will be 20-30% depending on the areas; it may go up as high as 50% in dense IT corridors”, remarked Gowda.
The state’s guidance values were revised last in 2018 by 25%. Karnataka CM Siddaramariah highlighted the government’s plans to revise the values while presenting his first state budget in July since being sworn into power this year.
What are the New Rates?
The revision rate depends upon the difference between the government-set guidance value and the actual market price at which the properties are being sold in an area. The revised values, calculated on a “case by case” basis, will range from 0-50%. Check out the government’s proposed changes in different areas:
- A 10% revision in guidance value for areas where the existing market prices and guidance values are at par.
- A 20-25% increase in areas where the market rate is 200 times higher than the existing guidance value.
- A 50% rise in guidance value where the market price is 500 times that of the guidance value. This will mostly apply to IT-dense localities like the Electronic City.
- A reduction in guidance values for areas where the existing guidance rates are higher than the market price of properties.
When Will The New Rates Come Into Effect?
Source: yandex
The revisions will be implemented in Bangalore from 1st October this year and will eventually extend to the state’s other districts in phases. The government released the draft guidance values for seven districts in Bangalore in the first week of September. While the feedback window inviting suggestions from the general public closed on 23rd September.
India’s Silicon Valley is witnessing a period of real estate boom, especially in the rental sector. Earlier this year, Anarock’s research highlighted that Bangalore was leading the list of cities in rent hikes, with a nearly 25% increase in rental values. The demand as well as the rates for living spaces, have been rising on a quarterly basis now in Bangalore. The recent move will only make it more difficult for the rising influx of students, tech professionals and entrepreneurs to buy homes in the city.
