Chennai's real estate landscape sees a modest uptick as the Tamil Nadu government's revised guideline values, effective from July 1st, lead to a 10% rise in property acquisition costs. For example, Alandur Road now values at INR 6,100/sq ft, up from INR 5,500/sq ft. This adjustment, prompted by a court's 2023 ruling, aims to standardize stamp duty calculations across 2.19 lakh streets. Builders, while acknowledging the necessity of fair valuation, highlight implementation challenges in districts like Alandur and Pallavaram. Despite marginal cost impacts, broader market conditions are likely to drive future pricing trends in Chennai's real estate sector.
The cost of buying a home in Chennai has increased slightly after the Tamil Nadu government revised its guideline values for land. These values are used to calculate stamp duty, a tax paid on property purchases, impacting the overall cost of buying a home.
The new guideline values, which came into effect on July 1st, are up to 10% higher than the previous values. This translates to an increase in the cost of registering a property purchase. For example, the guideline value per square foot on Alandur Road has increased from INR 5,500 to INR 6,100, a jump of INR 600. In Okkiyam-Thuraipakkam, it rose from INR 6,000/sq ft to INR 6,600/sq ft, and on Abhiramapuram 3rd Street from INR 16,000/sq ft to INR 17,600/sq ft.
The government revised the guideline values after a court ruling in March 2023. The court had thrown out a previous attempt by the government to increase guideline values by a steeper 33%, citing a lack of proper procedures. The new revision process involved forming subcommittees in each district to assess land values across a total of 2.19 lakh streets and 4.46 crore survey numbers and subdivision numbers. While values in core Chennai and old corporations like Coimbatore, Trichy, Salem, and Vellore rose significantly, those in other areas remained unchanged.
Builders associations in Chennai have expressed mixed reactions to the increase. A Mohamed Ali, president of Credai Chennai, acknowledged the need for a proper valuation system and commended the elaborate study conducted by the registration department this time. However, builders would have preferred a longer notice period before the changes came into effect.
G Mohan, past president of Chennai Southern Builders Association, highlighted that the revised values were not reflected on all streets in Chennai at the time of implementation, causing difficulties in registering documents in areas like Alandur and Pallavaram. Registration officials have assured that these glitches will be addressed soon.
The impact of the revised guideline values on property prices in Chennai remains to be seen. While the increase in registration costs will add a small burden of potentially a few thousand rupees to homebuyers depending on the property size and location, it is unlikely to be a major factor for most purchases. Other factors, such as overall market conditions and availability of properties, are likely to have a bigger impact on prices.
The revision process for guideline values is complex and involves balancing the interests of the government, which needs to collect revenue through stamp duty, and homebuyers, who want to keep costs down. It is important to note that the revised values were not reflected on all streets in Chennai at the time the new system was implemented. Registration officials have assured that these glitches will be addressed soon.
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