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What this implies.Any escalation in RE prices?
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mixed bag for real estate sector


DHNEWSSERVICE
BANGALORE:The 2007-08Karnataka Budget has delivered a mixed bag to theState’s real estate sector.

The persisting industrydemand for an outright reduction in stamp duty onregistration has been coldshouldered.

While Finance MinisterBS Yediyurappa has mootedmeasures to ensure transparency in land transactions,he has also gone in forahike in stamp duty onawards, trust deeds involving transfer of property, development agreements andPowers of Attorney (of development of commercialand residential properties),in accordance with the market value of the property.Powers of Attorney will nowcome at slab rates (see box)based on the market value ofthe property, with a cap ofRs 1.5 lakh.

More expensive

According to real estateindustry leaders, the new stamp duty on development agreements and Powers ofAttorney will make properties more expensive.

“The various duties, fees,taxes etc on real estate is already more than 30 per centon any property. Coupledwith the proposed increasein guidance value which hasbeen announced separately, the new stamp duty ratesare going to push this component to more than 40 percent,” Mr BalakrishnaHegde, President, Karnataka Ownership ApartmentsPromoters Association(KOAPA), toldDeccan Herald.Further, no proposal has been made to clear the airwith regard to the virtualban on registration of revenue sites in Bangalore Urban District.

Tab on land deals

The State Governmenthas sent the right signals toland grabbers through the2007-08 budget, with a proposal to introduce Title Insurance on properties.

The proposal — underwhich all properties backedby an insurance policy issued by an IRDA-recognisedcompany will enjoy 0.5 percent concession on paymentof stamp duty — is tipped tobe a small, but effectivemeasure to check land-related frauds in the State, especially in Bangalore.

Sale deeds and other conveyances will also see a 0.5per cent reduction in stampduty (from the existing 7.5per cent to 7 per cent),again,only if the conveyance isbacked with the title insurance policy.

Another measure thatcould keep land frauds incheck is the proposal to establish a repository of developers, builders and houseowners in Bangalore, on aPublic Private Partnership(PPP) model.The repositorywill collate all declared information by individual developers, builder and houseowners, that would later bepassed on to prospectivebuyers.

While some of thebuilders and developershave welcomed the proposals in principle, they havealso pointed out that themove to put in place a comprehensive insurance policyor an information bank onthe developers will involve along-winding process.

Progressive thinking

“These moves reflect aprogressive thinking, towards bringing in transparency in land-related developments in the State.However, we’ll have to waitand watch as on how theseproposals are converted towork on ground,” Roy C J,General Secretary, Karnataka Township Developers Association (KTDA),said.

Rs three crore for construction of new Sub-RegistrarOfficesPilot programme on e-stamping systemMore support to computerisation of recordsRepository on Bangalore’s developers and buildersTitle insurance to check real estate frauds

PLANS AHEADM Maarrkkeett vvaalluuee dduuttyySSttaammpp

Less than Rs one crore Rs 10,000Rs one crore to Rs two crore Rs 20,000Rs two crore to Rs five crore Rs 50,000Rs five crore to Rs ten crore Rs 100,000More than Rs ten crore Rs 150,000

STAMP DUTIES ON POWERS

The existing rate on Powers of Attorney is only Rs 1,000. Therevised rates effectively mean a ten-fold increase in stampduty on properties worth Rs one crore or less
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