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Saturday, June 10, 2017

Tamilnadu Cabinet decides to lower guideline value by 33%

By on Saturday, June 10, 2017

Tamilnadu Cabinet decides to lower guideline value by 33%

The Tamilnadu State cabinet chaired by Chief Minister Mr. Edappadi K Palanisamy, which met for a mere 20 minutes at the Secretariat on June 8, 2017, lowered the guideline value for land by 33% and resolved to pass a bill to implement the Central government’s GST (Goods and Services Tax) bill.

 An official release stated that in keeping with the 2016 AIADMK poll promise by the late Chief Minister Ms. J Jayalalithaa, the guideline value for land was reduced by 33% with effect from June 9, 2017.

Any loss to the State government would be made up by the hike in land registration fee from 1% to 4% for conveyance, exchange, gift and settlement for persons other than family members. This too would come into effect from June 9, 2017 according to the release.

A committee headed by the Inspector General of Registration Department had earlier recommended reduction of the guideline value for registration of properties by 33%. Guideline value is the land value as determined by the State government, based on facilities & infrastructure in or at a particular locality.

The minimum guideline value is Rs. 10 per square foot to a maximum of Rs. 23, 500 per square foot and is revised regularly to be synchronous with market value. Guideline value in Tamil Nadu was last revised on April 1, 2012.

The Tamilnadu state registration department has 8 zones covering 194 taluks, 32 districts, 4,521 villages with 1,98,686 streets. Chennai zone is the largest with 31% of total streets in Tamil Nadu. Tamil Nadu has 480 sub-registrar offices through which property can be registered.

In the backdrop of the guideline value of land in Tamil Nadu being lowered by 33%, and the registration fee hiked by 4%, realty veterans in the state have offered varying perspectives on the latest development in the sector.

Mr. T. Chitty Babu, CEO, Akshaya Homes, said, “As a developer, we were concerned that the guideline value is as high as 35% to 50%. And the transactions are not happening. We made many representations in the past. When the guideline value is high and market value is low, the land owner does not sell the property. When there is a match in these values, transactions happen, creating a  good inflow of land parcels into the market. When a seller sold a property previously, he had to pay more capital gains based on the guideline value. Now that problem has been addressed. The Government wouuld lose revenue as volume of transactions will go up.”

However, Mr. Chitty Babu cautioned that the registration charge rise will affect the common man interested in buying a property or / home as it would neutralise the effect of the previous move.

Mr. N. Nandakumar, MD, Devinarayan Group, said, “A downward reduction is a welcome move, which will help soften the capital values of land, which have been exorbitantly high in Tamil Nadu.

The per unit cost of real estate developed in the form of residential stock had become unaffordable across the board, due to this. To create affordable housing, we need capital values that are commensurate with the objective. This move should help the industry and the common man. The rise in registration fee might not have a bearing as it’s an incidental cost.”

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