The Hindu Business Line : `Imbalance' seen in guideline, actual market value of land in Coimbatore

IS there a real appreciation in land prices or is it being pushed up artificially? While the buoyancy in construction activity is indicative of the boom in the real estate market, industry insiders perceive a serious imbalance in the actual market value and guideline value of the land.

While the State Government has permitted a 10 per cent hike in the guideline value every year, in reality the land registration appears to take place at inflated rates.

A study of the trend indicate that (in most cases) the guideline value fixed by the Government for the lands, for the purpose of computing the value of the stamp to be affixed on the transfer document, was far higher than the actual prevailing market rate.

The Coimbatore Consumer Cause (CCC), while bringing this issue to the notice of the Chief Minister, Ms. J. Jayalalithaa, has submitted that the increase was high as 250 and 160 per cent in select plots at Saravanampatti village and Vadavalli village in Coimbatore District. The guideline value fixed by the Government is said to have increased from Rs 46 per sq.ft in November 2002 to Rs160 per sq.ft in November 2003 in a plot in Saravanampatti village, while it shot up to Rs 225/sq.ft in November last from Rs 86/sq.ft during the same period of 2002 in Vadavalli village.

The CCC has alleged that there was a blatant defiance of Government's instruction forcing the common man to spend huge sums towards stamp duty dues on the increased guideline values.

`We welcome the slash in stamp duty rate from 13 per cent to 8 per cent, but the real estate market has not seen any appreciable gain in the value of the land in recent years. Therefore, the increase of 10 per cent in the guideline value (permitted by the Government) without taking into account the actual market value is resulting in serious imbalance in the market value and the guideline value of the land', argued the Secretary of the cause, Mr. K. Kathirmathiyon.

Citing how the owners of land managed to artificially boost the value of the land, especially while availing themselves credit from banks or financial institutions to cover the credit limit sanctioned to them, he said ` if a person owned 3 cents in a particular area, he would try and purchase a few more cents of land adjacent to his holding at say Rs 10,000 per cent as against the actual price of Rs 2000 a cent. Subsequent to this purchase, the guideline value for his land of 3 cents is fixed on the basis of the latest transaction. Due to the fixation of such enhanced guideline value, the value of the earlier holding is fixed at Rs 30 lakh as against the actual value of Rs.6 lakh', he explained.

The CCC has reiterated that any increase in guideline value should be restricted to 10 per cent of the existing value only. Any increase beyond this limit should be allowed only after ascertaining the circumstance and after being convinced that the said increase was justifiable.

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