Guidance Value:

Guidance value is the minimum value set by the state governments below which no property transaction, generally a residential property can not register. The Guidance Values are published by the Dept. of Stamps & Registration and it gives the value based on locality and individual buildings/project names. Any changes in guidance value increase or decrease property prices. It is a major source of generating revenue for the state. Property registrations cannot go below that fixed price. A well-developed locality will have a higher guidance value.

The Stamp and Registration department holds an account of the guidance value in states. It is also known as Ready Reckoner Rate or Circle Rate in other states. Guidance Value is applicable to both plots and constructed properties. For plots, the value is calculated on the basis of the available land area excluding any constructed property while the value charged for the constructed properties including the land is known as a composite value.

However, it should be noted that guidance value is only the minimum price for registration and not the price at which the property would be sold. The market value of a property like other goods is changed and decided on the basis of a number of factors such as market forces, the proximity of the property to the different new developments being made in the city. For example, a property located near an upcoming airport will rise in property value. So, the property can be registered at either the guidance value or market value. But, in case of registration on the market value, you finally finish paying higher stamp duty.

For example, if the market value of a property in a particular area is Rs.6000 per sq.ft. and the Guidance Value is fixed at Rs.4500 per sq.ft. by the Revenue Department, then the homebuyers have a choice to register the property at a rate anywhere between Rs.4500 per sq.ft and Rs.6000 per sq.ft.

But, in case, if a property offers the market rate of Rs.5500 per sq.ft and the Guidance Value is priced at Rs.8000 per sq.ft, then a homebuyer can not register the property below Rs.8000 per sq.ft.

To overcome the gap between these two, the state government reviews the Guidance Value annually. The change in values helps the government to make higher revenue through stamp duty and registration fees. Reducing the gap between the Guidance Value and the Market Value also helps to control black money inflow in the real estate market.

The latest guidance value of the property in a particular area in a city could be obtained from the Sub-register office.

Recently, the Department of Stamp and Registrations, Karnataka published a final notification increasing the Guidance Value by 5% to 25% with effect from January 2019.

How to calculate Guidance Value of a property?

The guidance value varies between localities as well as apartments or projects within the same locality. Here are a few steps that calculate the guidance value for estimating your investment costs.

Prime Locality:

The current real estate and reputation of the developers, and the kind of upcoming projects ranging from affordable, mid-segment or luxury residences define guidance value. A locality which is popular for luxury apartments and villas by famous builders will have a high guidance value.

Higher Floors:

The base guidance value continues the same until the 5th floor. The value rises from the 6th floor upwards.

No of Amenities:

In Bangaluru, the state government has set the lifestyle amenities given by residential properties into 14 categories varying from the clubhouse, kid’s play area, commercial spaces and more. The Guidance Value raise for 5 or more groups of amenity.