The recent proposal to increase collector guideline rates by an average of 18% in 1,283 locations across Bhopal has come in for stringent opposition with critics arguing that frequent hikes in benchmark property rates inflate real estate costs, slow down development, and push housing out of reach for the middle class.
While the government claims these increases reflect market trends and earn enhanced revenues for the state, realtors and buyers say they distort the sector and limit accessibility.
Benchmark property rates, or circle rates, serve as the minimum valuation for tax purposes. While these rates prevent underreporting of property transactions—a common method of circulating black money—their unchecked rise creates an artificial price ceiling. In Bhopal, where affordability fuels real estate growth, inflated valuations often exceed actual market demand.
Developers struggle with high land acquisition costs, while buyers must prove a high-taxed income or secure large bank loans to afford properties. Once purchased, stamp duty and registration fees further burden them. The result is stagnation: unsold inventory piles up, new projects slow down, and urban development suffers.
The latest proposal, open for objections until March 19, suggests rate hikes in areas witnessing increased commercial activity, land diversions, or major infrastructure upgrades. Some locations are set for a fourfold increase, while rates in parts of Jahangirabad, Sultania Road, and could double.
MP Alok Sharma, who had earlier stalled a 200% guideline hike in November 2024, has called for a meeting of public representatives to ensure a balanced approach that neither chokes real estate nor harms government revenue. Realtors, led by CREDAI President Manoj Meek, argue that guideline rates should remain stable for at least three years.
They point out that while land use has remained unchanged for two decades, guideline rates fluctuate unpredictably. Unlike Indore, where property rates have seen steadier adjustments, Bhopal’s rapid hikes have made real estate unaffordable, deterring investment and pricing out the middle class. Any increase in circle rates directly impacts property tax, further straining buyers.
Meek has urged the government to roll back rates to pre-COVID levels and follow a more scientific approach to valuation. Beyond affordability, high circle rates monopolise land ownership. As smaller developers and individual buyers struggle to meet financial requirements, large investors and business groups dominate the market, limiting competition.
This disproportionately affects self-employed professionals and small business owners, who find it harder to secure formal financing. Moreover, with real estate increasingly used as a tax enforcement tool, transactions either move into informal channels—reviving the black money problem—or stall altogether.
While curbing black money is necessary, arbitrary hikes in benchmark rates hinder economic growth. Experts suggest revising circle rates based on actual transaction data and implementing a graded taxation system that encourages both affordable and high-end housing.
If rates continue to rise without a clear methodology, Bhopal risks driving away investment, slowing development, and making home ownership an unattainable dream for many.
