July 31st 2014
Land deals in Tamil Nadu have hit a seven-year low, mirroring the tough phase that the real estate industry is going through. A policy note tabled in the state assembly on Wednesday shows that the number of transactions dipped for the second consecutive year in 2013-14, after hitting an all-time high of 35 lakh two years back. There were 26.53 lakh land deals during the last financial year, compared to 26.9 lakh the previous year.
Barring Chennai and Thanjavur, the rice bowl of Tamil Nadu where farmers are selling their lands to real estate promoters due to unpredictable monsoon, all other districts witnessed a fall in transactions. While Madurai, Tirunelveli and Cuddalore witnessed a steep fall, Vellore, Coimbatore and Trichy recorded a moderate decrease. The real estate business remained active in Chennai, with 4.96 lakh properties changing hands, especially along arterial roads like Old Mamallapuram Road, Grand Southern Trunk Road and Bangalore Highway (NH4).
Experts say the drop comes in the backdrop of revision of guideline value of properties in 2012. Guideline value is the rate fixed by the government for a piece of land, and it’s done to prevent undervaluing of a property. The buyer has to pay stamp duty and registration charges based on the guideline value. Since April 2012, the government levies a charge of 8% of the property value on each transaction, which includes 5% stamp duty, 2% transfer duty and a registration fee of 1%. The increase in guideline value and duty ensured that despite a fall in transactions, the government earned a record revenue of Rs 8,055.74 crore in 2013-14.