Karnataka Property Registrations Halt to Impact Builders Cash-flow

Property registrations have halted across Karnataka as the state government has temporarily shut all 243 sub-registrar offices after announcing the two-week lockdown. “We have closed down all offices to ensure the safety of our employees and the public. We are not eve

BY Realty Plus
Published - Tuesday, 18 May, 2021

Karnataka Property Registrations Halt to Impact Builders Cash-flow

Property registrations have halted across Karnataka as the state government has temporarily shut all 243 sub-registrar offices after announcing the two-week lockdown. “We have closed down all offices to ensure the safety of our employees and the public. We are not even allowing online registrations,” said KP Mohanraj, inspector general of registration and commissioner of stamps. The real estate industry is worried that the registration of apartments will be delayed, affecting developers’ cash flows. “Our cash flows will get impacted because banks will release housing loans only after registration. Flat buyers won’t be able to avail capital gains exemptions. The state government will also be affected as it stands to lose revenue from stamp duty and registration fees,” said Errol Fernandes, the secretary of CREDAI, Bengaluru. Darshan Govindaraju of Vaishnavi Group said that the suspension of the registration process was a real dampener for the already troubled sector. “E-registrations could have been a viable alternative. Authorities and industry should make the shift towards moving forward,” he said. Officials of the stamps and registration department don’t know when the process will resume. We have no idea. It all depends on the Covid situation and how fast cases decrease in the state. During the nationwide lockdown between March 24 and April 25 last year, Karnataka lost out on around Rs 1,000 crore in stamp duty and registration charges as real estate transactions fell sharply. This is an important revenue source for the state government. “Every month, the department collects Rs 800 crore to 1,000 crore,” said revenue minister R Ashoka. In 2020-21, around 19 lakh properties were registered in the state, generating revenue of Rs 10,480 crore as against the revenue target of Rs 12,655 crore. The target for 2021-22 has been kept unchanged. Delayed registration didn’t mean loss of revenue. It’s not a loss; it is deferred revenue. Buyers will have to register their properties once the process restarts.