The land prices in Kerala vary, even two adjacent lands might be sold at different rates. So, knowing the Fair Value of Land is important for every buyer before purchasing. Many rules set by the Kerala Government regarding property registrations and taxes are based on the Fair Value of that land. Hence the concept of Fair Value is an essential aspect to know about before purchasing a property in Kerala.
Without complete knowledge of Fair Value and Market Value, there is a high possibility for buyers to fall into the cheat-trap of sellers. As a result, they may end up paying an excessive amount of money. So, every buyer should have a complete idea of what the Fair Price in that locality is.
What is the Fair Value of Land in Kerala?
The Government of Kerala determines the Fair Price of Lands all over the State, known as the Fair Value of Land. The Fair Value of lands varies on a very large scale depending on the location of the land. The Value also doesn’t remain constant but changes periodically (mostly once a year).
Many taxes collected by the Government of Kerala, like Stamp Duty, Land Tax during Sales Deeds, Property Tax, etc., are based on the Fair Value of the respective land. Hence, determining the Fair Value of Land is an aspect determined by the government with a lot of study and research about lands located all around the state.
Factors considered by Kerala Government before deciding the Fair Value
The government of Kerala fixes the Fair Value of a particular land by considering so many factors. Factors like whether the land belongs to Urban or Semi-Urban or Rural area, whether it comes under a Greater Municipal Corporation or Municipal Corporation or Gram Panchayat, and which District, City, and Area does the land belong to.
Some major aspects taken into consideration are:
- Availability of Basic Facilities – Any commercial or residential units would all root for basic facilities like water supply, electricity, phone connection, signal availability, cable connection, internet connections, etc. Therefore, lands located in areas that suffice all such basic needs would have a higher Fair Value than lands in locations where any or all facilities are scarce.
- Surroundings – Lands surrounded by shops, restaurants, parks, gyms, and commercial units have a higher Fair Value. This is because residential sections like houses, apartments, or ventures built in such lands will have extreme demand from buyers. Hence, Fair Value is also estimated at a higher price by the government.
- Public Infrastructure – Lands closer to highways or airports or railway stations or the metro (in Kochi) have a higher demand and a higher Fair Price.
- Availability of Source of Income Options – Lands in economically profitable areas such as areas closer to IT hubs, offices, etc., will be estimated at a comparatively higher Fair Value.
Steps to check the Fair Value of any land in Kerala
Every buyer has to know the Fair Value to know how much Stamp Duty has to be paid. The Kerala Fair Value of land could be enquired from the sub-registrar office in that area or easily checked online. The process to check online is:
Step 1: Visit the website https://igr.kerala.gov.in/.
Step 2: Press the huge CTA button at the center of the page with the words “Click on the option Fair Value search of Land”. A new page is then opened.
Step 3: From the drop-down menus, select the District, RDO (Revenue Division), Taluk (Sub-District), and Village to which the land belongs to. These are the mandatory boxes.
Step 4: Now, we can directly press the “VIEW FAIR VALUE” option to get the entire list of land locations present in that Village. The list would be detailed with the Survey Number, SubDivision Number, Block Number, etc.
Step 5: To know the Fair Value of a particular location, enter the Block Number, Survey Number, Survey Subdivision Number, Resurvey Number, Resurvey Subdivision Number, etc., in Step 3 and press the “VIEW FAIR VALUE” option.
The Fair Value of Lands are listed based on 15 different Land Types – Commercially Important Plot, Residential Plot with NH, Residential Plot with Corporation, PWD Road access, Municipality, Residential Plot with Private Road Access, Panchayat Road Access, Residential Plot without Vehicular Access, Garden Land with Road Access, Coastal Belt, Garden Land without road access, Water Logged Land, Waste Land, WetLand, Rocky Land, Hill tract with road access, Government Property, and Hill tract without road access.
It should be noted that there is a possibility that the Fair Value displayed on this website of any location might be incorrect. And it is mentioned that the government is not responsible for any such error, and it is advised to refer to the official notification released periodically (mostly once a year).
Reason for Periodically Changing the Fair Value of Land in Kerala
At any particular time, the value of any land might increase drastically if any new developments took place around that land (for example, a new highway is constructed or an airport or IT hub is sanctioned to areas closer to the location of that land). Or may decrease drastically if any significant accidents or industrial failures take place. In such cases, the Market Value might also increase or decrease, respectively, and hence the tax collected in the form of Stamp Duty should also be increased or decreased accordingly. Of course, if Market Value is higher than Fair Value, then Stamp Duty could be collected according to the Market Value. But there is a high possibility for frauds during registration to avoid Stamp Duty amount, where the buyer shows a very low amount as the Property Value and then unofficially pays the remaining amount to the seller.
To avoid such frauds in Stamp Duty payment, the Fair Value of land is changed periodically to collect the Stamp Duty as per the development and demand in the location.
Difference between Fair Value and Market Value
As said earlier, the Fair Value of land is the Fair Price determined by the Government of Kerala depending on which district, city, or village, and area the land belongs to. On the other hand, market value is the price that the owner of the land sets during a sale. Therefore, it is totally up to the owner to set the Market Value to whatever price he/she wishes.
The landowner usually decides its Market Value based on factors such as how developed the area around the land is and how many people demand to buy the land in that location.
Fair Value of Land in Kerala: Is it a crime to sell a property at a way higher Market Value than the Fair Value?
No. There is no hard and fast rule or compulsion that any land in Kerala should be sold only at the determined Fair Value of that land. Therefore, any land or property could be sold or bought at any price. However, the Stamp Duty and Registration Charges should be paid to the government accordingly during the Sale Deed registration. The lands are mostly sold at higher prices than the Fair Value due to the demand rate. This is the reason why the Fair Values are also updated periodically.
The Role of Fair Value of Land during Property Deeds
For any buying, selling, or change in ownership of properties, the official registrations that have to be done according to rules and regulations of the government are called Property Deeds. The government has defined 3 types of property deeds:
- Sale Deeds – Registration of typical property sales where the seller openly advertises his interest in selling his property and decides on a buyer after all negotiations are done.
- Gift Deeds – When a property owner decides on his own to register for a change in ownership to a different person, be it a friend, family member, or acquaintance.
- Conveyance Deeds – Registration of all types of change in ownership, be it sales deeds, gift deeds, lease, exchange, mortgage, a partition of property, etc.
In such property deeds, the price at which the seller is selling the property to the buyer is called Property Value or Market Value. During registration, apart from the property value, an additional amount has to be paid to the government for registration. This additional amount is called Stamp Duty.
Stamp Duty is a form of tax that has to be paid to the government during any change of ownership registrations. The tax could be paid by either the seller or the buyer, but it is most common for the buyer only to pay the extra amount. Stamp Duty, thus, is a source of income to the government.
The Stamp Duty is not the same for all the lands. Usually, the amount of Stamp Duty that has to be paid to the government is dependent on the Fair Value. Hence, the percentage of Stamp Duty for a particular land is determined based on the Fair Value of that particular land. But in cases where the Property Value or Market Value of land is higher than its Fair Value, then the percentage of Stamp Duty is determined based on the Market Value.
For registration of a house in an apartment or venture, Stamp Duty is determined by considering 2 factors (1) Fair Value of the land on which the apartment is built (2) area and cost of the flat or house.
Another important point to note is that stamp duty should be paid on the day of registration or within 2 months of that date of execution. In cases where the periodic Fair Value changes done by the government took place within this 2-month time limit, the amount of stamp duty to be paid is still as per the Fair Value on the registration day, i.e., the day of execution.
Relation between Fair Value of Land in Kerala and the One-Time Land Tax during Property Deeds
During any sales deed, the seller has to pay a one-time tax on the profit that he/she is going to gain from selling the land. The amount to be paid is calculated based on the Fair Value. There are 2 ways through which the profit is calculated based on the Fair Value at the time of registration:
- The seller’s profit is generally considered the difference between the cost at which the seller purchased the land and the current Fair Value of that land. And the percentage of one-time land tax is considered based on this profit.
It has to be noted that even if the seller gains less profit due to selling the land at a Market Value that is less than the Fair Value, the seller still has to pay the tax by considering the profit with respect to the Fair Value of the land.
- If the value during land registration is higher than the Fair Value of that land, then the profit is calculated as the difference between the cost at which the seller buys the land and the cost at which he/she is currently selling it.
Fair Value of Land in Kerala: Recent Updates
The government of Kerala has recently decided to determine the Property Tax in urban areas based on the Fair Value of the lands. This new type of property tax calculation is chosen to increase the borrowing percentage of GSDP (Gross State Domestic Product) of Kerala. The borrowing percentage of GSDP in Kerala in the year 2019-20 was 3%, and with this new proposed system, the percentage might increase to 5%.
The Property Tax in Kerala was initially determined based on how much rent per year is generally being charged in that area. Later, the government opted for determining the Property Tax basing the plinth area. The plinth area, also known as the built-up area, is the entire area occupied by the building, including internal and external walls. The purpose of the building, number of floors, durability of the building, and many such factors were also considered.
FAQs:
Why should we know the Fair Value of a Land?
It is because Fair Value is the minimum fair price at which the land could be sold, and it is the factor based on which Stamp Duty Charges are calculated during land registration.
How is the Fair Value of a Land in Kerala calculated?
The government calculates the Fair Value of Land-based on many factors like which district, city/village does the land belongs to, and how developed is the area around that land.
What is the difference between Fair Value and Market Value?
The Fair Value of land is the price determined by the government for that land, whereas the Market Value is the selling price decided by the landowner.
How to know the Fair Value of a Land in Kerala?
Fair Value of a Land in Kerala could be enquired from the sub-registrar office of the city/village that the land belongs to, or it can be seen online on the web portal https://igr.kerala.gov.in/
Which cities in Kerala have the highest Fair Value of Land?
Thrissur and Kochi are ranked 1 and 2, respectively, based on the maximum prices of Fair Value of Land in Kerala.
