Estimated land value as maintained by the state government is known as the market value of land or guidance value of a particular property. In some states, it is also known as circle rates and is the minimum amount at which the sale of a particular property is eligible to be registered with the respective state government. It is the duty of the state government to maintain these particular records (Department of Stamps and Registration of every state) and publish them every year. For example, a buyer needs to calculate the Mannivakkam land value based on the guidance value of the property while investing in it.
With the help of the guidance value, we can find out the reckoner value of a particular property. The market value of properties published by the Department of Stamps and Registration on the other hand changes every year. This value also depends on locality and some other factors. At times it can also change from one construction to another within the same locality.
Is the market value or guidance value of property always increasing?
When it comes to guidance values, it is considered to be one of the most profitable revenue lines. But that does not imply a continuous hike in the market value. Whenever there is a change in the guidance value, it will have a direct effect on the value of a property. Hence a high market value dictates an increase in the market value of the property, just like a drop in the guidance value leads to a drop in the market value of the property. But it is important to understand that the demand in the market alone will not be linked to the guidance values. Research states that there are plenty of factors that have a direct effect like development in a particular area. Thus, Mannivakkam land value is based on the market value of the area.
In fact, the Department of Stamps and Registration always tries to ensure that the rate of the property is similar to the current market rates. There is another crucial reason for ensuring a similarity between the rates- elimination of cash transactions and accumulation of black money. Property tax is one of the biggest revenue tractions for any State Government and they take a lot of measures to ensure that property owners do not evade their tax liabilities. In many states, the State Governments have requested the metropolitan boards (or corporations) to set up the rate of property tax in a way that mirrors the market values of properties and not on the basis of the unit area to calculate the value.
Various terms for the market value of land
The term ‘Guidance Value’ is understood by most people. But there are some other terms that are frequently used to talk about the same value, namely- Market Value of Land, Guideline Value, Ready Reckoner Rate (also known as RR Rate and is commonly used in the state of Maharashtra), and Circle Rate (widely used in various North Indian cities like Delhi and Noida).
Some important facts about the Market Value of Land
- As the market value of a property is determined by well-established research methods by each State Government, the market value is the lowest price at which a property can be sold. Again the guidance value is the minimum amount at which a property is eligible for registration in a locality. Therefore, no property can be sold at a price lower than the market value. This provides the seller with the minimum selling price.
- Let us suppose that an individual wishes to buy a property at any price that is less than the guidance value demarcated by the government. In such a case, the said person is responsible for the registration of property at an actual value and pays taxes based on the purchase price of the given property.
- People from other states might be confused when you use the term guidance value of a particular property. This is common because the terms vary from state to state.
- All kinds of properties in a locality must be assigned with a guidance value. It could be a low budget plot in Mannivakkam or CMDA approved plots in Mannivakkam, an apartment within a residential complex, a villa, or even a plotted development.
- The developmental stage of any property determines its guidance value. Hence, a property located in a well-developed area implies a higher guidance value in comparison to a property situated in a developing or under-developed neighbourhood.
- Although the market value of a property is established by a scientific method by the State Government, the seller can set a price that is higher than the market value. He has the right to ask for a price he deems fit. The buyer cannot compel the seller of a property to quote a price that is the same as the guidance value determined by the state government.
Bottom Line:
Market value or the guidance value of any property is an important factor that any potential investor should take into account prior to investment. We hope with this informative blog, you have a comprehensive idea of market value or guidance value, the variation of names used in place of guidance value, and its importance. Hence, Mannivakkam land value alone cannot be enough information to dictate a purchase. One needs to conduct thorough research on the different values of a property before investing.
