Composite Value Registration
The Composite Value Registration system, introduced by the Tamil Nadu government effective from December 1, 2023, is a new approach to the registration of apartments and villa plots. This system ensures that the entire property, including both the land and the constructed area, is registered in a single document. According to the government, this will augment revenue and streamline the registration process.
Previous System and Its Issues
Before the Composite Value Registration, buyers and sellers of apartments had to register two separate documents: one for the undivided share of land (UDS) and another for the construction agreement. This practice led to several issues. Often, the full land parcel in a project was not registered and transferred to the buyers. Sellers or promoters could retain a portion of the land, allowing them to construct beyond the sanctioned plan and sell later, leading to disputes with buyers. Common issues included disputes over common areas, car parking, and plan violations, which often surfaced after buyers began occupying their properties and forming associations.
Addressing Plan Deviations and Revenue Loss
The Composite Value Registration system addresses these issues by ensuring that the entire property, including the land and construction, is registered comprehensively. This reduces plan deviations, which previously required later regularization. Additionally, the old practice resulted in revenue loss for the government. Separate registrations for UDS and construction agreements led to lower revenue. The new system integrates these registrations, enhancing government revenue.
Benefits for Buyers
For buyers, the new system provides fully documented property values, facilitating bank financing for property purchases. Although there might be an increase in stamp duty and overall costs for buyers, the process is already prevalent in many states and runs smoothly.
Government Study and Implementation
According to a government circular, officials studied similar systems in other states, particularly Karnataka, before implementing the scheme in Tamil Nadu. They consulted industry representatives to refine the scheme. Despite these consultations, the real estate industry expressed strong resistance, fearing the new system would close loopholes and burden buyers, affecting market sentiments.
Composite Value Determination
To implement the system, the government established Composite Values for all survey numbers and streets. Initially, three sets of values were proposed but faced widespread opposition and were quickly withdrawn. The government then finalized Composite Values for over 3 lakh streets in Tamil Nadu and 1.5 lakh streets in Chennai, which are now available on the registration department’s website, REGINET. The Deputy Inspector General of Registration of respective districts determined these values based on prevailing local rates.
Calculation of Composite Values,Stamp Duty and Registration Fee
The Composite Values are based on the super built-up area of the flat, promoting transparency and preventing overcharging by promoters. The property value is calculated by multiplying the Composite Value (per sq ft) with the super built-up area of the apartment. Stamp duty and registration fees vary based on the property value:
- For properties below ₹50 lakh, stamp duty is 4% and registration fee is 2%.
- For properties valued between ₹50 lakh and ₹3 crore, stamp duty is 5% and registration fee is 2%.
- For properties over ₹3 crore, stamp duty is 7% and registration fee is 2%.
Impact on Property Registration Costs
Although the rates appear lower than current charges for land or construction agreement registration, the new system requires paying stamp duty and registration fees on the total property value, potentially increasing costs in some cases. Despite industry opposition, the government remains firm on the new system. Reports indicate that apartment registrations continue to perform well across most areas.
Summary
The Composite Value Registration system represents a significant step towards transparent and streamlined property transactions in Tamil Nadu. By addressing past issues and ensuring comprehensive property documentation, the new system benefits both the government and property buyers. While it faces opposition from the real estate industry, the government’s commitment to the new system underscores its potential to revolutionize property registration in the state.
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