The reduction in stamp duty to 3% for the first registration of apartments valued between Rs 35 lakh and Rs 45 lakh is set to boost the demand for affordable housing in the state.
Chief Minister B S Yeddyurappa in his budget proposals for 2021-22 announced reduction in stamp duty from the existing 5% for a period of one year.
Almost 35% of the residential properties in key markets of Karnataka, including Bengaluru, consist of affordable category properties. This reduction will help propel demand for the sub-Rs 50 lakh residential market, according to real estate experts.
"Going by the experience of Maharashtra, where the reduction in stamp duty catapulted home sales, we can expect to see a similar boost to sentiments and activities in Karnataka as well," Shishir Baijal, Chairman and Managing Director, Knight Frank India said.
He said if the real estate developers are able to absorb the remaining stamp duty value, it will make the residential sector in Karnataka extremely attractive and viable for end-users.
However, the industry said the benefit of stamp duty reduction should have been extended to properties in upper price bracket as well in order to realise the true potential of the market. " it would have been far more beneficial if it was extended to other segments as well, given the burgeoning rate of expansion not only in Bengaluru but also the rest of the State," Rajendra Joshi, CEO-Residential, Brigade Enterprises Ltd said.
He also said the benefit should have been extended at least for a period of three to five years instead of just one year ending March 2022.
“We need to keep in mind that the cycle of planning to execution to registration of properties is significantly longer. It would definitely help the real estate sector if this benefit could be announced for a period of three to five years as it will help developers modify their product mix as well as help consumers plan their finances and purchase decisions better. We urge the Government to also consider the mid-segment and provide similar benefits for homes below one crore,” Joshi said.
The move to cut stamp duty will promote affordable housing in the state and bring in more positivity in the sentiments amongst the consumers. “This will prove encouraging for the first-time home buyers and help strengthen the ecosystem of investment in real estate and accelerate purchase decisions,” Sobha Ltd spokesperson said.