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Amnesty scheme is good for genuine buyers

Amnesty scheme is good for genuine buyers

Amnesty scheme for Pakistan real estate sector

The Federal Ministry of Revenue is preparing the draft to offer amnesty scheme for the real estate sector. In few days, Finance Minister will announce the final draft after approving it. This amnesty scheme will be offered to normalize the real estate sector, which is witnessing the stalled activities. Duration of this amnesty scheme will be 4-6 months and people have to pay 3-4% taxes to whiten the black money. After the time period government will collect the tax as usual. More will be announced in the coming days.

Why government is offering this amnesty scheme?

The billion dollar question is, what are the motives of the government to offer amnesty scheme for real estate sector? Many think that government is helping the people with black money. This is totally non-sense. The government will achieve its two major goals, which were not achieved in budget 2016-2017. Firstly, due to high property transactions, federal government and provincial governments will collect huge revenue in form of taxes. Secondly, government will achieve its target of bringing the undocumented economy into tax net.

Effects of amnesty scheme

Real estate transactions will increase

The immediate effect of real estate amnesty will be the rise in property transactions. The stalled activates in real estate sector will resume again. The people with black money will see a relief and will immediately sell their properties to exit the real estate market. Due to the limited time duration, everyone will be desperate to whiten the black money. Real estate agents will see higher income for short period of time.

Property prices will fall due to more properties in the market than buyers

We are coming to an era of buyers’ market. Buyer’s market evolves when there are more properties in the market than the buyers. This always results in property price fall. People with black money will be desperate to sell their properties at any cost to whiten the black money. People with black money will definitely lower the asking price to exit the real estate sector.

Capital will shift from real estate sector to Pakistan Stock Exchange as it happened when property tax 2016 was announced

At the moment in Pakistan, only Pakistan Stock Exchange is best for investment purpose. Property prices are falling day by day but Stocks are rising on daily basis. Now Pakistan Stock Exchange has crossed the historic mark 41,000. China is willing to buy 40% shares of Pakistan stock exchange as Pakistan Stock Exchange is one of the top 5 best performing stock exchanges of the world. With the entry of Chinese capital in Pakistan Stock Exchange, we will see new mark 50-60,000. So investors will sell the properties at any cost and will jump to the stocks.

Genuine home buyers will get properties at low prices

Like the government, real home buyers will be the ultimate winners. Millions of people with black money will flood the market with properties. Already there are more properties in the market than buyers and this is why property prices are falling. This will ultimately result in more price fall. Genuine home buyers will be on the driving seat. Real home buyers will have more negotiating power and will secure good properties at low prices.

Taxes to be paid by property buyer and seller

(46) Comments

    • Was Malik
      Many people are saying that amnesty scheme will be offered.
      There is a protest in DHA Lahore and rally from DHA Mosque to Punjab Assembly on 24th of October. Rally and protest will be held by dealers from different parts of Pakistan.
      Lets see the outcome.

  1. adeel

    on   said 

    aoa. dear.what to invest in b17. the r some problems which want to ask. what will be future of faisal hills housing scheme taxila. to be developed in neighbour of b17. since the
    chairman of b17 ch.abdul majed is owner of faisal hills there is confusion about value of b17 in coming year. as he will prefer faisal hills over b17. so I want to invest in b17. what will be future oh b17. is it yield profits out elsewhere. plz do strong in this. regards

    • Adeel
      We should always avoid things we have doubts in.
      I will prefer you housing schemes near New Islamabad International Airport Islamabad like TOP CITY 1
      Graceland Housing ISLAMABAD

  2. Looks like prices are stuck at this time. Could you please let us know the clear picture, specially for DHA city karachi ?


    • Arif
      Prices are down in every city
      DHA Karachi is the biggest victim of tax amendments as DHA Karachi was the biggest source of whitening black money via real estate sector.
      In some phase of DHA Karachi, plot prices are 30-40 % lower than May 2016.
      Prices are falling and you will see clear picture in December in 2 months time.
      Realtors are telling us that investors and sellers are desperate to sell properties at loss but it seams that no buyer in the market.
      This clearly indicate that biggest crash in history of Pakistan is yet not over.

  3. Bader

    on   said 

    Brother, Thanks for very precise information. i must say you are doing a great job.

    I have a question about new revised Tax system. Before all property taxes (CVT, Stamp Duty, Advance Tax and CGT) were calculated on DC rates. Does DC rates still has any impact , or FBR rates have overcome Dc rates?

  4. Hasan

    on   said 

    History repeats itself. Since 1947 there have been several amnesty schemes in Pakistan and also in neighboring India. All failed to achieve any significant success, while corruption, black money, parallel economy all have had spectacular success over the decades.

    What is it that these amnesty schemes hope to achieve? Bring in additional tax revenue, document the economy, encourage culture of filing taxes, etc.

    And why do they always fail? Because corruption is addictive. People who accumulate untaxed money or money via other illegal means do not simply cease their activities given such soft incentives like amnesty schemes. In the first instance, they have other less risky (from their point of view) avenues available than amnesty schemes, to continue to enjoy a good, albeit undeserved lifestyle. Hence, tax generated as a result of these schemes is a paltry figure compared with the grandiose expectations dished out for public consumption.

    Secondly, for the most part these schemes are considered a trap. People with black money do not fall for them. They do not see them as a one-time payment mechanism to whiten money and then lead hassle free lives in future. Given culture of government functionaries to perpetually harass anyone who has been netted, the black money club would rather stay off the grid and not put trust in our esteemed government departments. One rotten apple knows well the other rotten apple.

    However, some things are changing. Despite all the systemic rot, some good things have started happening in fits & starts. No one individual is responsible. But the corrupt are being increasingly forced to mend their ways. The net is being tightened. By whom? That’s the funny thing. By the same people who are (or were) also corrupt; lacked either a conscience or a backbone or both. E.g. what happened to all those lists compiled by FBR in the past; lists made up of people with unexplained wealth? No action. So why should more recent changes in law be of concern to people with black money? Well, because they have also begun to sense a change in the air & it scares them. There comes a time when a combination of factors forces nations to upgrade themselves. What’s the source of change? Media? New political forces? The Army? IMF? The Chinese? None of the above or all of the above, take your pick. That’s why I say no one individual or institution controls these things. We are witnessing an evolution before our eyes. In other words, Pakistan is morphing from a third world status to a reasonably developed one.

    Now about the property market. One doubts that trillions of black money there would suddenly become good money (that the perpetually corrupt would miraculously turn a new leaf) however many amnesty schemes are offered. The scheme itself might not work but in general, black money in property does not have a bright future. Market would follow its age old cycles. With or without black money, present market is in a down cycle. The only thing with this particular down cycle is that black money factor is tending to further exacerbate the slide. Again, doubters shall say that black money has always been present and won’t affect market. Well, yes black money has always been there but it took time for it to reach a certain crescendo. From that high note, market has to correct itself to tune in with white money which operates at a significantly lower level (perhaps 1/4 to 1/5 of inflated prices). Doubters could try to deflect reality this way or that, nevertheless prices are falling.

    About and other similar sites, I too have been noticing their bias in ‘trying’ to go against the tide and keep shoring up the market. The articles they post also seem to be unsuccessfully trying to portray picture of a world where all is well. It is not. They would do better to become more balanced or gradually lose credibility. Let me also mention certain newspaper articles that are quoted by some to strengthen their arguments (e.g. against Ghar47). A newspaper article borrows excerpts from a biased website like and then someone relies on such articles to claim market is in excellent health; that is akin to using circular arguments. Such newspaper articles are not based on original investigative research and smell of planted / paid or at best rather shoddy journalism. Hence, a bit skewed to first quote’s articles or their gravity-defying ‘stats’ and then a newspaper article based on same. Oh really? Well ok, it’s a free world in terms of expressing opinions but it doesn’t change the tide which is spelling trouble for a property market relying 80-90% on black money (the crescendo, if you will). I quite endorse Ghar47’s more balanced views and style of presentation in telling it like it is.

    • Hasan
      Many thanks for your brief views and presenting the true situation of Pakistan real estate sector.

      There is fundamental problem with Pakistan real estate sector. And that is it never worked on any law or fundamental. Strange but true.What is fundamental? In developed world, mortgages are offered according to a law of affordability. Your 1 year salary x 5 = 5 years salary. So according to the banks a person can buy property worth 5 years salary. We can give some relaxation to buyers. Lets assume that both husband and wife are working. In this case couple can buy property equal to 10 years salary. What is the average salary in Pakistan for professionals? Lets say 1 Lac for husband and 1 Lac for wife. Annual salary of both husband and wife is 24 Lac. 5 years salary of husband and wife is 120 Lac. What we can buy with 120 Lac? 5-8 Marla houses. But who is buying property in DHA and other areas where only plots are more than 2-5 crore worth? Here is the problem.

      Yes so it clearly shows that there is no real market in Pakistan but artificial market where properties are bought with black money. Why prices have fallen by 40% in DHA KARACHI? Source of black money is bothering investors. Due to absence of black money we can see where our property market is heading.

      Amnesty scheme offered or not, in both cases prices will fall. Prices will fall as in first case investors will get their money out of market and in second case of amnesty scheme, trapped investors will be out of market.

      What price fall we are seeing is just like spring season. Autumn is coming. December will prove it. We will see more price fall in two months. Investors are diverting their investments towards stocks as Pakistan Stock Market is best performing in the world. STOCKS & REAL ESTATE are deadly enemies as both are used for inflation hedge and investment purpose. In last 3 years property was on rise but stocks were in fall. Now stocks are rising and property market is falling.

      Pakistan is changing. World is changing. Property market is changing. Its not the old real estate sector where we will get 40-50% rise per year. Now we have to invest for 3-5 years to see real benefit.


  5. adeel

    on   said 

    aoa. dear all any future about cda sector b17. I m interested to buy a plot for and getting in 18lac . but confused about future of b17 due to CGT and faisal hills a new project launched by faisal town f18 team. I want to get plot for at least 1 year then plan sale .

    • Adeel
      B-17 Islamabad has great future. After the completion of China Pakistan Economic Corridor and New Islamabad International Airport we will see price rise.
      B-17 Islamabad has low prices as compared to other societies in CDA so chances of price rise is high.
      You have to pay 7.5% CGT if you sell it after 1 year of purchase.

      • adeel

        on   said 

        great. I m not only investing but depending upon my job if stayed in islamabad will have own house there. so suggest for plot in b17 or not . invest plus house after 1 or 2 years depending on my job . prices are bit reduced after CGT . not idea it will fall down further. faisal hills which will be started in neighbour of b17 is causing big confusion as this will reduce charm of b17 in coming time. plz guide i have no idea what so ever about b17 future as I m getting 18 to 20 lacs plot in e block there in b17. I want both investment and house after alteast 1.5 to 2 years. ideas
        suggest about cda sector i15. i16 our b17 for investment of 1to 2 years. tnx

    • Rizwan
      Mind blowing development and with much clarity
      This is what I way saying
      Property transactions are low as FBR is asking the two questions now
      1- Source of Income
      2- Actual price of deal on which property is being sold.

      Another point
      In future there will two options
      Either no difference between dc rates or FBR rates
      only FBR Rates
      Yesterday met many people in DHA Lahore
      Sellers, buyers, investors & estate agents
      Prices are falling on daily basis
      Sellers are desperate to sell properties
      Buyers are waiting for prices to further down
      Investors are desperate to pull out money at any cost
      Estate agents are worrisome about their future

      I also discusses about coming amnesty scheme
      Realtors told me that market sentiments are low
      Amnesty scheme will fail to give property price rise
      According to realtors, property market will not stabilize till mid of next year.

          • Abdul Rehman

            on   said 


            I read your article and appreciate your efforts to make the public aware of the current realty market situation, however I heard from different sources that the govt is now considering to revise the DC rates in certain areas especially DHA ;


            What do you think this will actually happen? if yes then what do you think will be the impact on the market.


          • Abdul Rehman
            Many thanks for you your sweet comments.

            Yesterday I was in DHA Phase 6 Lahore in a dealer’s office. That was actually get together of old friends. I have real estate portal, others were buyers / investor, sellers and estate agents. We discussed about current real estate market situation and about forecasts. Here I would like to share about views of all parties.


            Buyers and investors who want to invest in property are very happy due to decreasing properties as both will get cheap properties in future. Buyers/investors are not willing to buy property at the moment due to daily decline in prices. They will buy property by end of December or start of January as according to them at that time prices will be bottom low. So watch and see situation.

            Sellers and investors who have already invested in property sector are very worried. One of my friend told me that he has 2 plots in DHA Phase 8 Lahore. Prices have dropped 40-45 Lac since last 4 months. According to him, 1 Lac price is dropping on daily basis. What actually worried them most is two things, it is also their experience. Few deal were very close to be done, one buyer left the bayana. Other cancelled the deal. According to sellers they are receiving few calls. Buyers are bidding very low prices. And buyers are not offering solid bid as they are on watch and see policy.

            ESTATE AGENTS
            According to estate agents market is standstill as transactions are 80-90% low of pre-budget level. People are on wait and see. Buyers are waiting for more price drop. Sellers are desperate to jump out of the sinking ship. Estate agents are leaving DHA and closing offices to start other business as according to them real estate market will take 1-2 years before it normalize.

            There are news about revising/lowering the rates in DHA. There are also news about amnesty scheme by government. These measures are just to boost real estate sector and to provide trapped investors to get out of real estate sector. These schemes will badly fail without any impact and will further drop the property prices.

            The biggest problem is the source of income. Another problem is that you have to show price on which property was sold out. Source of income and crashed the real estate sector as BLACK MONEY IS FLUSHED OUT OF PROPERTY MARKET.

            Real estate sector acts according to buyers sentiments. People invest when sentiments are high. There is general perception that prices will drop so prices will drop as due to low sentiments buyers will stop buying.

            Therefore in future we will see more price drop. I have stated many times that prices will drop 35-50%. What prices we see are artificial due to speculation. Now speculation is out so prices will drop to much affordable level.

          • Abdul Rehman

            on   said 


            Thank you for your detailed reply.

            I am an investor based in Karachi. So far prices have fallen up to 40% in some areas , especially in those areas where prices were artificially high ( mostly DHA phase 8 ). I agree with your view that prices were abnormal and a correction was bound to happen .

            But on the other hand now that prices have fallen substantially, real estate agents have recently started asking their customers to start investing again as they feel that due to this amnesty scheme and DC rate revision, prices will increase; also in some areas all of a sudden property owners have started asking 5-6% higher prices than a week ago, solely based on the amnesty scheme and expected DC rate revision.

            However, I agree with your view and personally think that these policies will only act as an exit strategy for the big players, this temporary price increase is artificially created and prices will fall even further when the big fish exit the market.


          • Abdul Rehman
            Many thanks for sharing your first hand experience of the market
            The situation is very dire
            Real estate agents are trying their best to energize real estate sector but in vain

            For real buyers and investors I will just say that wait 2 more months as I am expecting more price fall due

            1- Negative sentiments about real estate sector
            2- Political turmoil in Pakistan
            3- Sinking world economy

  6. AA sir

    If I wait till December then are there any effect on taxes? Or just price of the plot ll be lower. As you are expert in property . How much decrease you are expecting?

  7. AA

    I am planing to buy a kanal plot in Bahria overseas b block and my budget is around 125 . I am hopeful to get a plot in this price there
    And there is 720000 transfer plus taxes(I m filer)

    What do you suggest should I wait or buy now ?

    • Riz
      Everyone is on wait and see situation.
      Prices are falling on daily basis.
      Even after the AMNESTY SCHEME property prices will continue to fall.
      Prices will fall and you will get cheap deals.
      Wait till December 2016, just more 2 months you will see much lower prices.

      • Rajab

        on   said 

        Ghar47, thanks for your article with good feedback. I need your sincere advise as i want to buy 5 marla plot, please advise the current time (moharram) and after moharram will it be correct move for entry or i need to wait more. if i have to wait then what are the reasons for wait. kindly share your expertise on this.

        further please advise lake city lahore 5 marla file for M7C or m7d is it good option or should i consider M8.

        For FAZAIA Gujranwala is this society approved and having all NOC from government dept, whats your recommendation on this society. kindly advise.

        • Rajab
          Its better to wait till first week of December. Property prices are falling. First lets price fall to stop. Why should you pay more a property you can buy with less money?
          It is started and maintained by PAF. No problem in this society but yes due to less funds their development progress in different cities is bit slow.
          Lake City Lahore is good investment in Lahore. Within 1-2 years you will get good reward. After the completion of LRR, one Interchange Name will be LAKE CITY INTERCHANGE. So prices in this society will definitely appreciate in 1-2 years.

          • Rajab

            on   said 

            Thankyou for your advice and i fully agree with you to wait rather than pay more.

            For Fazaia Gujranwala i check their map, can you please advise do they have only one block or they have plan for expansion or they already have extra land which is yet to be develop and map need to share with public. Can i consider the residential or commercial options when market price come down. Plz advise the entry time in FAZAIA Gujranwala.

            For lake city do i need to wait further for files buy as you advised or i should consider M8 which is under development till Dec-2016.

          • Rajab
            There are no news of expansions yet lets see what is store in future
            Residential plots are best option
            LAKE CITY LAHORE
            This is the time to buy plots as after development prices will rise
            After one year, the completion of Lahore Ring Road and LAKE CITY INTERCHANGE will give good returns.

  8. rizwan

    on   said 

    Xcellent blog nice good info u have shared thx keep us updating…one thing i wana ask…ppl can only whiten the black money when they sell da property n declare correct value and pay tax at a lower rate???is dis how the amnesty will work???or is there any other mechanism….plz discuss the amnesty mechanism in detail..i am not understanding how will ppl whiten their money

    • Rizwan
      First we need to know why property transactions are low?
      Property transactions are low as FBR is asking the source of income. Buyers have no interest to enter the trap but sellers/property owners with black money are trapped in the nest. This scheme will provide wayout trategy for the proeprty owners by paying 3-4% taxes.
      Buyers with black money are not interested in real estate as he/she can move money to stocks very easily.
      Sellers with black money are trapped in real estate sector.
      This amnesty is for property holders of black money to get out of real estate sector by paying taxes.
      Definitely people will have to declare the real value of property and taxes will be collected on real value so that whole money is whitened. THE BIGGEST TRAP.
      So government will be the real winner of this amnesty and genuine buyers.
      GOVERNMENT is ready to collect the historic high taxes in single year by this scheme.
      China is knocking on the door to invest in STOCKS. China wants to buy 40% shares of Pakistan Stock Exchange.
      So this whole scheme is to divert investments from real estate sector to STOCKS.


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