Registration of property stops in Karnataka; builders fear a disruption of cash flow.

The registration of property has stopped across Karnataka because after declaring a two-week lockdown, the government shut its 243 offices of the sub-registrar for the time being.

“To ensure the safety of our staff and the public our offices have been closed down. Online registration is not even allowed,” KP Mohanraj, inspector general of registration and commissioner of stamps, said.

The real estate industry is concerned that apartment registration will be postponed, impacting developers’ cash flows. “Our cash flows will be affected because banks will only make housing loans after they have been registered.” Flat purchasers would not be eligible to take advantage of capital gains exemptions. The state government will be impacted as well, as it will lose revenue from stamp duty and registration fees,” said Errol Fernandes, secretary of CREDAI, Bengaluru.

According to Darshan Govindaraju of Vaishnavi Group, the suspension of the registration process was a major setback for the already troubled sector. “Electronic registration may have been a viable option. Authorities and industry should turn their focus to going forward,” he said.

Stamps and registration officials are unsure when the operation will resume. “We don’t know. It all depends on the Covid situation and how quickly cases in the state decrease,” a senior official explained. Karnataka lost about Rs 1,000 crore in stamp duty and registration charges during the nationwide lockout that lasted from March 24 to April 25, last year, as real estate transactions plummeted.

This is a significant source of revenue for the state government. “Every month, the department collects between Rs 800 crore and Rs 1,000 crore,” revenue minister R Ashoka said.

In 2020-21, approximately 19 lakh properties were registered in the state, generating revenue of Rs 10,480 crore as opposed to the target revenue of Rs 12,655 crore. The goal for 2021-22 remains unchanged.

Another senior revenue official stated that late registration did not result in revenue loss. “It isn’t a loss; it’s deferred revenue. When the process is restarted, buyers will be required to register their properties,” he said.