CM Calls for Revision of Market Value of Lands, Realtors Worry about Affordable Housing

Hyderabad: Following Chief Minister A. Revanth Reddy's directions last week, the stamps and registrations department has initiated the preliminary exercise to revise market value of lands in the state.

Official sources said that by raising the market value of lands, they expect earnings to be of the order of Rs 20,000 crore through property registrations this year (2024-25). In 2023-24, the government earned Rs 14,295 crore.

Revanth Reddy felt that the income earned in 2023-23 was significantly less vis-à-vis the real estate boom and the actual land values. He noted that the government-prescribed market value was way below the actual market value and hence there was a need to revise government rates.

The department will submit a report on the revised land market value proposals next month.

Disappointed at the earnings falling short, Revanth Reddy called for a revision of the market value of land.

The real estate sector, while agreeing with the Chief Minister’s thinking on shoring up revenues, feels that a proper study should be commissioned to understand where the land areas should be increased. The land rates as well as the built-up structure have been revised in recent times.

Focus should be on retaining the USP of the state — affordable yet having a world-class infra. Increasing the base price of the land would have a cascading effect across the supply chain. Since most of the taxes and fees are taken as a percentage of the total value, an increase in one or more components will increase the overall costs, opined C. Shekar Reddy, national vice-chairman, CII-IGBC.

For instance, the registration fee, stamp duty, and transfer are now pegged at 7.5 per cent. This is a 25 per cent increase from the earlier six per cent. The government should try to bring down these three components to about 4.5 per cent. This will ensure that the volume rises and the government still gets more revenues, he said.

The builders and developers pay an impact fee, which is telescopically built. This too has been revised by 25 per cent over the previous rates along with the land rates. Others like permission charges, external development, land use charge and NALA charge are also collected as a percentage of the total value. The impact would be minimal if all these were based on a fixed charge.

Typically, of the total project cost, about 30 to 33 per cent goes towards various fees, levies, charges, and taxes at multiple levels. Also, there is another five per cent, which is passed on to the end customers. The housing board's mandate is on the decline. Almost all units are being built by the private sector.

Affordability should not be sacrificed. The government could consider extending some incentives to the buyers. For instance, registrations in the name of women members can attract a lower rate. The registration charges should be rationalised, Shekar Reddy said.

The government should consider exploring PPP models instead of selling land. Open auctions to realise higher value jack up the prices in the vicinity. If affordability is hit, the state cannot be competitive

to attract new investments. Also, the real estate’s pace will impact over 200 ancillary industries linked to real estate and construction segments, which are the largest employment providers after agriculture.

According to Credai Hyderabad president V. Rajashekar Reddy, there is a need for a scientific study, involving the industry as well, to assess the gaps while revising the prices of lands. There are instances of people paying less than the CARD rate in higher floors. Timing of the revision is important and the industry should be given assurance of business continuity. Some incentives to buyers will help. “We are with the government in its efforts,” he added.

Up and down

How earnings from land rose, and fell

2019-20: Rs 7,061 crore, 16.59 lakh property documents.

2020-21: Covid-induced lockdown cuts earnings to Rs 5,260 crore, 12.1 lakh documents.

2021: BRS government revises market value of land.

2021-22: Rs 12,370 crore, 19.72 lakh documents.

2022-23: Rs 14,291 crore, 19.47 lakh documents.

2023-24: Rs 14,295 crore, against target of Rs 18,500 crore.

Data from stamps and registrations department