subject: Guideline Rates Delayed By 10-45% Behind Booming Realty Market [print this page] Need any proof of how buoyant the real estate scene in Chennai is...? Here it is - in five months since guideline values (the government -notified rates for registration of properties) were revised across Tamil Nadu, market rates have overtaken them by 10-45%. Guideline value is used by the state government to evaluate the actual value of the residential property of Chennai for levying stamp duty. The guideline values were revised last year after disparity of five years so that they would be indicative of prevailing market rates.
Proliferation demand for housing in Chennai has resulted in steady climb in prices of residential property in Chennai and the suburbs over the last six months. In the most areas, the guideline value is below the market price and difference ranges from 10% to 45% as said by real estate consultant Mr. S Ramaswamy of RECS Group.
The guideline value of land on the Arch Bishop Mathias Road in Boat Club is 18,000 per sq ft, on the contrary the prevailing market value for the street is around 33,000 per sq ft. Likewise, the guideline value for Mr. R K Salai is 19,000 per sq ft whereas the market rates close to 25,000 per sq ft. As guideline values are on the lower side even in central business districts.
Prices in most part of Chennai have increased by close to 20% in last six months going by the residential price index (Residex) brought out by the National Housing Bank as expert says.
Recent figures shows, Chennai is one of the fastest growing real estate markets among all metros, but boom is not reflected in the new guideline values finalized five months ago. As guideline values were revised after a span of five years, in meantime the prices of residential property in Chennai had increased two to fourfold while the jump was about five to six times in the suburbs.
As pointed by property consultants, many buyers and sellers are keen on registering properties at market price. As said, whenever the property is registered for a price higher than the guideline value that becomes the new benchmark for the locality. Over a period of time the gap between guideline and market rates will reduce.
Realtors says, while the guideline value in Chennai are higher than market values, then in the suburbs it is the reverse and that is a matter of concern. As this disparity is partly owing to the slow proliferation of real estate prices in suburban areas. Mr. Chittu Babu said, if properties are available at lower rates, they have to pay a higher stamp duty and registration fees there as they are calculated based on guideline values which are higher than market prices. Section of developers feels that in some areas the guideline value revision has been for too steep.
Such upward revisions, the middle income people will find difficult to buy property in Chennai as many of them are moving to suburban locations. Even the guideline values were low builders kept property prices high.
