Flats, houses to be costlier

Flats and houses will become expensive as the government has increased the duties on basic construction materials such as cement, steel and tiles in the proposed budget, said a top executive of a real estate company.  

FR Khan, managing director of bti, one of the top developers in the country, said the property registration cost used to be 15 per cent, which was already a burden for property owners. Now, it has been increased to 19 per cent. 

For example, the owner of a flat priced at Tk 1 crore would have pay to spend almost Tk 20 lakh to register the property alone even if it is a second-hand property.

"How can this be affordable? It is not affordable at all considering the present condition of the economy," he said.

According to Khan, the property registration cost in Bangladesh is too high compared to India, Pakistan, Malaysia, and Thailand, where the fee ranges between 4 per cent and 6 per cent.

Various duties and taxes on basic construction materials such as steel and cement have been raised for the next financial year, which begins on July 1.

The prices of construction materials have already gone up owing to their spike in the global markets and higher import costs driven by the sharp fall in the value of the taka against the US dollar.

The implementation of the fiscal measures proposed in the budget will push up the prices of apartments automatically. "As a result, people will feel discouraged to buy flats," said Khan.

He noted that the budget proposed doubling the property registration tax in order to increase the government's revenue collection.

"The proposed fiscal measures will only exacerbate the woes of real estate developers and the public."

Although cutting the property registration cost will be a challenge for the government because of limited fiscal space stemming from lower-than-expected revenue generation, he still suggested the authorities lower the costs and associated taxes and duties.

"Taxes levied on basic raw materials should be reduced to a bearable level."

He said real estate companies and developers have been suggesting the government adopt favourable measures for the real estate sector for a long time but nobody has paid any heed to it.

When an individual goes to register properties, they should be able to show the actual value of flats or land.

"This means if the market value of a property is Tk 2 crore, the amount should be mentioned in the official documents. And this will be possible when the registration cost is tolerable," said Khan. 

He thinks a lower registration cost will be a win-win situation for all stakeholders: owners, buyers, realtors and the government. 

"In a lower registration regime, everyone wins. This will resolve the issue of undeclared money as well. But that has not happened." 

According to Khan, the peripheral regions of the capital city should have proper facilities to help middle and lower-income groups own properties.

Khan called for reducing the taxes imposed on basic construction raw materials to make housing affordable and re-evaluating the regulations related to the newly approved detailed area plan.