'Unfair...Cost Instantly Goes Up': Prestige Group On Karnataka's Property Registration Fee Hike
With the doubling of the registration fee to 2%, the total fee payable for any property transaction has increased to 7.6% from 6.6% earlier.
The recent decision by the Karnataka government to double the registration fee is an unfair burden on the homebuyers, according to Irfan Razack, Chairman and Managing Director of the leading Bengaluru-based real estate player, the Prestige Group.
Effective Aug. 31, the registration fee for all properties has been doubled to 2% from 1% by the Karnataka government. Thus, the total fee payable for any property transaction in the state has increased to 7.6% from 6.6% earlier.
“The government should realise that it is the home buyer who is getting loaded with this. For someone buying a house worth Rs 1 crore, the cost instantly goes up by Rs 1 lakh, which is pretty steep. It will be like the last straw on the camel's back for the buyer,” he said during a conversation with NDTV Profit on Monday.
The fee hike comes at a time when “there has been a lull in the registrations”. This is due to regulatory challenges such as the implementation of e-khatas.
Despite the increased costs, Razack remained optimistic about the resilience of homebuyers and the overall health of the real estate market.
“It's unfair to load homebuyers up with another 1% more, but that will not impact the business as such because real estate prices are actually pretty healthy and doing well, so that's not the major issue,” he noted.
Addressing concerns about potential job losses in India’s IT sector, Razack held a contrarian view, pointing towards the uptick in commercial real estate demand in Bengaluru, Pune, Hyderabad and Chennai — seen as India's key IT hubs.
“The IT sector is still pretty strong. Jobs are still getting created. We are leasing out more and more space to the GCCs (Global Capability Centres), which is also the IT sector. If more and more take-up of office space happens, that means more and more jobs are getting created. So, there's nothing to cause concern on that.”
On the broader real estate cycle, he cautioned that a slowdown could occur if prices "get too hot and too high too soon," breaching the "affordability barrier." However, he noted that for now, a strong economy and positive sentiment continue to fuel home purchases.
The Prestige Group CMD expressed hope that the upcoming GST Council meeting would bring relief to the sector. His primary appeal was for the reinstatement of the input tax credit (ITC), which was removed for real estate.
“The removal of input credit led to a straightaway cost increase of 18% on the product itself. If the input credit does come back, that will be a big, big boon; maybe we can offer more affordable prices,” the top executive highlighted.
Shares of Prestige Estates Projects, the flagship company of the Prestige Group, closed 1.42% higher at Rs 1,584 apiece on the NSE, while the benchmark Nifty 50 settled at 24,625.05, up 0.81%.
