Nose-diving property prices call for guideline value cut
Now, the government's guidelines value is fairing way above market prices, tilting the balance adversely for the customer. This means the stamp duty at the time of registration is paid on an overvalued property, increasing the tax burden for the customer.
This gap between guideline and market value prompted the National Housing Bank to come up with an index on residential prices called the Residex. The intent was to stream line values marked in different locations and bring about a transparency in market prices.
However, the residex, introduced about three years ago, has so far not served as a benchmark for computing the guideline value in the city. While this did not impact the market during the boom period, the present sluggish trends certainly calls for remedial action to boost the flagging real estate sector.
Thus it would be a good idea to correct the prevailing guideline value to reflect correct market trends and the formula used in computing the residex would act as good beginning.
Further to ensure the price variation of property units within the same locality does not exceed 10 percent, reflecting differences in their respective premium nature, a panel could be made responsible for fixing this guideline value. The prices computed by this panel should be scientific, reflecting true market conditions and subject to review on a yearly basis.
Such a move is bound to not only bring in transparency in dealings in the real estate sector, but also create a more mature market that is not swayed by speculation and underhand dealings. While speculative content would see a significant downside, the black economy which is rampant in large land dealings will be extensively checked.
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