Karnataka stamp duty cut on flats to have limited impact on sales

Listed players such as Brigade, Sobha, Puravankara seek reduction across all budget segments

After Maharashtra, Karnataka has reduced the stamp duty charges to 3 per cent from 5 per cent for homes valued between Rs 35 lakh and Rs 45 lakh. According to industry players, with housing demand largely skewed towards the mid segment involving properties priced within the Rs 50 lakh to Rs 1 crore budget range, the move will have a limited impact in the state unlike Maharashtra which had reduced stamp duty for properties across all budget segments.

While the reduction in stamp duty for apartments priced at Rs 35-45 lakh would bolster the affordable segment, real estate players said it would have been far more beneficial if it was extended to other segments as well. The state had slashed the stamp duty on houses costing less than Rs 20 lakh to 3 per cent from 5 per cent last year.

Today, Maharashtra Government also reduced stamp duty by one per cent for woman buyers if property is transferred in woman or women's name. Last year, the Maharashtra reduced stamp duty to 3 per cent till March 31, 2021.

“While the stamp duty benefit has been currently declared for the fiscal year 2021-22, we need to keep in mind that the cycle of planning to execution to registration of properties is significantly longer,” said Rajendra Joshi, CEO, Residential Brigade Enterprises.

“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 Rs 1 crore,” Joshi added.

Echoing similar views real estate player Sobha said while the step will prove encouraging for the first-time home buyers, it would have been a big push if the state government would have allowed this reduction of the stamp duty across all budget segments of the property buyers. 

According to Anarock, Bengaluru presently has a total unsold stock of nearly 59,350 units across all budget segments. Of this, just 24 per cent is within the Rs 45 lakh price bracket, while 64 per cent is between Rs 45 lakh to Rs 1.5 crore budget range. “While the move does carry a feel-good factor and will strike the right sentiment chord, it is not likely to give a significant boost to housing sales in Bengaluru on the lines of what we saw in Mumbai. Maharashtra had reduced stamp duty for properties across all budget segments - not just one category,” said Anuj Puri, Chairman, Anarock Property Consultants.

According to Puravankara the move will push several fence-sitters who were waiting for a lucrative opportunity to invest. “It would have however been a delight if the same reduction was applicable across all the segments and not restricted to only houses ranging between Rs. 35-45 lakh. As a pan-India Developer, we would like to see more state governments follow suit and reduce the stamp duty rates,” said Ashish R Puravankara, Managing Director, Puravankara Limited.

Prestige Group said the step is in the right direction. “Since the registration happens only after completion, this provision instantly will help in the movement of completed and ready-to-move-in inventory in this price bracket. Given the reduction of home loan rates to 6.7 per cent and now reduction in stamp duty to 3 per cent, the time is best to buy a home,” said Venkat K Narayana, CEO, Prestige Group