SC order on GPA may jolt real estate

Hyderabad: The Supreme Court order to stop property sale transactions through general power of attorney (GPA) is being seen as a move to reduce evasion of stamp duty.

If this order is implemented the real estate dealing in Hyderabad will further go down according to some real estate developers. While the market is dull with the present situation, this judgement will further cut into the business they opined.

But some legal experts dealing with land deals say that it cannot be implemented immediately. The property consultants on the other hand say the Supreme Court's ruling on the sale of properties through general power of attorney (GPA) will hit owners who bought on GPA as the registration was not completed.

While the property transactions have come down drastically due to the ongoing general strike in the Telangana region, the new law will also have its impact on the real estate further.

Sridhar, a Realtor cum legal consultant from Ashoknagar, said that it is likely to keep in check the people who put 'black money' in benami properties. But he added that there could be some loop holes by which we can still register the properties.

'The Court must have consulted all the states since land is a state subject,' he said. The court cannot just impose the decision on the states he opined.

Selling property on GPA has been affecting the government revenue as both the buyers and sellers try to avoid stamp duty. Narsa Raju, a revenue official, said that the order is yet to be seen but it will help in bringing down such incidences.

Prabhakar Rao, a broker at the Registration office in Musheerabad, said that it might take quite some time for the implementation of the Supreme Court orders. 'The GPAs are helpful in cases of sale and purchase of property when the owner lives abroad or in other states,' he says.

Police officials on condition of anonymity said, the department has been receiving complaints related to property frauds carried out on GPAs from time to time. They, however, added that in some cases the police could help owners as they had all the proper documents and agreements in place.

The judgement would acc'ord clarity and reduce litigation when the government has to acquire land for development and the compensation would be delivered to the rightful owners of the land. It may lead to rationalisation of stamp duties also said the Minister for Revenue Raghuveera Reddy.

'As of now the land and real estate transactions are few and they are likely to continue falling and by the time this judgment reaches the local bodies and common man, the properties will continue to be transacted on GPAs,' said Chandrasekhar, a High Court advocate.

On the other hand the State government had earlier announced that it will cut down stamp duty by 1 per cent every year so as to reach the target of 5 per cent by 2012. As per this, it has to cut down the stamp duty by 1 per cent this year, but nothing has been done on that front as yet.

However, according to revenue department officials, the chances of reducing stamp duty in the state are less as the State government is dependent on the revenues generated by land and property transactions.

The heavy stamp duty is leading to irregularities during registration. Several buyers are resorting to under-valuation of property to escape stamp duty while sometimes it is leading to evasion of registration charges. Several buyers, particularly in rural areas are entering into illegal sale agreements to avoid duty.

The Koneru Ranga Rao committee, which was set up by the State government to initiate land reforms said that a lot of property deals are not legal as they were on a white paper.

While the other states were reducing stamp duty and increasing their revenues, the State government has been increasing duty on GPA to force people to opt for registrations to increase its revenues.

While other states were reporting good results with reduced stamp duty, the revenue generation in AP was stagnated for a while, despite increase in stamp duty.