FBR reduces property valuation rates of major cities
The property valuation rates were increased by the Former Finance Minister Ishaq Dar in Budget 2016-17. The rates were increased to bring the property valuation close to the market rates. The second increase of 25-30% was expected in the budget 2017-18. But instead of increasing, FBR reduces property valuation rates for major cities Karachi, Lahore, Islamabad, Rawalpindi etc up to 57%.
Reasons of rate reduction
Less revenue collection
Property valuation rates were increased by 100% or even more in budget 2016. The aim was to bring the more people to tax net and collect extra revenue. But unfortunately tax collection has reduced as higher taxes reduced the property transactions. This rate reduction is an effort by the government to collect more taxes due to expected rise of property transactions.
Protest by real estate agent
Property transactions are the bread & butter of realtors. Due to higher taxes property transactions reduced and realtors saw loss of income. Many real estate agents closed their agencies due to record low income. Property transactions in DHA Lahore reduced from 200 per day to just fewer than 20 per day.
Protest by genuine buyers
Due to high real estate property valuation rates, registry of property became expensive. This move was not hailed by the genuine buyers as even the transfer of property within family members was expensive. To ease this pressure, government has reduced the real estate valuation rates of major cities of Pakistan.
Rate reduction will increase or decrease the property price?
Many real estate agents have hailed this move as real estate friendly, yes it is. Many property experts have predicted the rise of property price, totally wrong.
Real estate prices in Pakistan are not down due to high taxes but due to the blockage of black money. SC, FBR & NAB are investigating the property scams and illegal housings schemes. The ruthless crackdown on black money is the main reason of property price fall in Pakistan as investment has decreased.
When Main Muhammad Nawaz Sharif and Imran Khan Niazi have been questioned about the source of income, so will be very citizen.
The reason of property price fall is, ‘THE SOURCE OF INCOME AS NO CITIZEN CAN HOARD ASSETS BEYOND MEANS’.