State Revenue Minister R Ashoka announced on April 21 that the Karnataka government has decided to slash the state-wide property guidance value by another 10 per cent for the three months from April 25 to July 24. Market experts say that provides relief to home buyers.

The government reduced the value by 10 per cent for the three months from January 1 to March 31 to give people an early chance to sign up. “Due to the needs of the people, it has been decided to lower the guidance by another 10% for the three months between April 25 and July 24. This will apply to the sale and purchase of various properties. After discussions with Chief Minister Basavaraj Bommai, is issuing orders in this regard,” Ashoka said.

Guideline values are the minimum selling prices for properties determined by the government based on location and structure type. Many people applauded the move. “The decision to slash guidance values for another three months between April 25 and July 24, 2022, is a welcome respite for many homebuyers, especially as residential demand remains high in the pandemic.

This is good because property prices have headed north amid an upward trend in building materials inflation. Any additional growth, including guide values (which would increase registration costs), would hurt buyers and thus affect home sales,” said Anuj Puri, chairman of real estate consultancy ANAROCK.

Strong home sales also had a positive impact on government coffers. According to ANAROCK Research, Bengaluru witnessed nearly 13,450 home sales in the first quarter of 2022, up 55 per cent year-on-year and 9 per cent quarter-on-quarter, Puri said.

Sathish Kumar M, president of NAREDCO (National Real Estate Development Council) Karnataka, said that this step is welcome in principle and will incentivise people to close deals early. In the past, sales rose from January to March whenever there was an incentive.

However, the guidance value itself is on the high side. The government has lowered the stamp duty on the guide value, but it would be more appropriate if the guide value were diminished, Kumar said, adding that it should be reduced by at least 5-10 per cent.

Homebuyers say lower price guides for properties are not helping them. MS Shankar, secretary-general of the People’s Collective Effort Forum, said that due to the poor enforcement of the Real Estate (Regulation and Development) Act, the government should work to restore the level of trust among homebuyers and encourage them to invest in the property market, a group of homebuyers across the country. He added that it should call for a joint meeting with all stakeholders.

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NAREDCO Karnataka’s Kumar said that in some areas with higher guided values, transactions did not happen. In addition, he suggested that the government consider regulating property ownership to reduce litigation. “We plan to file a PIL (Public Interest Litigation) on behalf of NAREDCO soon to obtain proof of title,” he added.