Karnataka's Property Registration Fee Hike Adds to Bengaluru's Housing Market Woes
Karnataka’s decision to double property registration fees to 2% of the transaction value is expected to further strain Bengaluru’s already struggling housing market, where affordability pressures are already high.
Property RegistrationBengaluru Housing MarketReal EstateAffordable HousingTransaction CostsReal Estate MumbaiSep 02, 2025
With this change, transaction costs for home purchases have risen sharply, and experts warn this may weaken home buyers' sentiment. This will impact the budget of the homebuyer, said Navin Dhanuka, director at real estate development firm ArisUnitern RE Solutions. Also, “developers will have to reorient their project financing terms, costing to ensure the demand scenario remains intact as significant inventory is likely to be added over the next several quarters,” he said.
According to industry estimates, Bengaluru’s housing market had already been showing signs of cooling before the announcement. In the April-June quarter, housing sales dipped around 8% from a year earlier to 15,100 units, after a steeper 16% year-on-year fall a quarter earlier to around 15,000 units. Unsold inventory has piled up, rising nearly 30% year-on-year to 58,900 units. This backdrop of declining demand makes the timing of the fee hike particularly sensitive, with many fearing it could exacerbate the slowdown.
The higher costs are already worrying homebuyers. Until now, purchasing a flat worth ₹1 crore required around ₹6.6 lakh in stamp duty and registration fees. With the new rates that came into effect Monday, this will increase to nearly ₹7.5 lakh. For buyers in the ₹40–70 lakh price range, the hike translates into an additional ₹50,000–75,000.
Since banks do not finance registration charges, families must arrange these funds on their own. For first-time and salaried buyers, this additional cash burden could be enough to delay or even shelve home purchase plans, said the managing director of a listed real estate firm who did not wish to be named.
Mid-, affordable segments to face severe hit
Market dynamics are shifting in favour of premium housing. In the first six months of 2025, Bengaluru recorded 34,551 new residential launches in H1 2025—a 19% YoY increase—with Q1 alone contributing 20,484 units (a 62% spike) to the total. This growth has been driven largely by the premium housing segment (₹1 crore+), where the launch volume more than doubled from a year earlier, according to a report by real estate consultancy JLL Real Estate Intelligence Service.
This strong demand at the top end suggests that wealthy buyers, less sensitive to transaction costs, may continue driving activity despite the hike in registration fee, while the mid- and affordable segments will likely face a sharper hit from the increased cost. Analysts say developers will likely double down on luxury projects to tap demand where it exists, leaving the affordable housing market underserved.
Bhavesh Kothari, founder at real estate brokerage firm Property First, said the sudden increase in stamp duty will obviously hurt consumer sentiment. “Bengaluru’s residential market has seen historic highs in the last five years with rentals and property values appreciating rapidly, making it one of the top-performing markets in the country,” Kothari said. We also expect that the ongoing ecosystem partnerships that the industry has with banks, housing finance companies, and home design firms among others offering flexible payment terms and affordable services will act as a cushion against the rise in registration charges. However, with a lot of registrations already delayed due to eKhata, consumers are likely to suffer further,” he said.
The Karnataka government has defended its move by pointing out that even after the hike, transaction costs in the state remain lower than in neighbouring Kerala or Tamil Nadu. It has also cited revenue pressures, noting that stamp duty and registration collections are falling far short of targets. Yet, many argue that the timing is questionable. With property prices in Bengaluru already up over 50% in the last four years, the fee hike only compounds the challenges for ordinary homebuyers.
In the short term, analysts expect registrations to slow as buyers recalculate budgets and defer decisions. The risk, some warn, is that the state may inadvertently push buyers toward rentals or even encourage under-reporting of property values to save on fees.
Frequently Asked Questions
How much has the property registration fee increased in Karnataka?
The property registration fee in Karnataka has been doubled to 2% of the transaction value.
What is the impact of this fee hike on homebuyers?
The fee hike increases the overall cost of home purchases, potentially delaying or deterring homebuyers, especially in the mid- and affordable segments.
How has the housing market in Bengaluru been performing recently?
Bengaluru’s housing market has been showing signs of cooling, with a decline in sales and a rise in unsold inventory.
What is the government's rationale for the fee hike?
The Karnataka government has cited revenue pressures and noted that even after the hike, transaction costs remain lower than in neighboring states.
How are developers expected to respond to this fee hike?
Developers are likely to focus more on luxury projects where demand is less sensitive to transaction costs, potentially leaving the affordable housing market underserved.
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