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Directorate General Immovable Properties established: what people in Pakistan real estate need to know

Laws & Taxes
3 min read | Muhammad Farhad  | December 6, 2018

The long-anticipated Directorate General Immovable Properties (DG IMP) has finally been announced. DG IMP was announced as a part of the previous government’s bid to formalise and regularise and most importantly, tax real estate. It had been announced in the Finance Act 2018 (Budget 2018-19) and a significant section of the new arrangements were dependent on it – and indirectly on the notification which was to announce the establishment of the directorate. Now the notification for establishment of DG IMP has been issued, so what next for realtors and real estate?

Read: Budget 2018-19: The real estate question

Things we know about Directorate General Immovable Properties

Below are some of the important things we know about Directorate General IMP’s function so far:

  • It will be Federal Board of Revenue’s (FBR) specialised agency on all matters relating to real estate and immoveable properties which includes open plots, constructed properties — including residential, commercial and industrial, agricultural lands, housing schemes, societies, towers, chains of luxury apartments, and other related assets.
  • It will be responsible for real estate classification in respective jurisdictions.
  • It will also deal with service providers such as real estate builders, marketing entities, brokers, architects, consultants, and interior designers, among others.
  • The directorate will be responsible for geo-mapping of immovable properties.
  • It will be responsible for valuation of immovable properties, including the job of roping in private evaluators, indexing of valuation, and market surveys to update them.
  • The directorate will track online marketing of immovable properties.
  • DG IMP will also map rented properties of all kinds in major urban centres, industrial estate, zones and other areas.
  • DG IMP will also track operations of foreign real estate concerns in Pakistan.
  • A real estate metrics will be developed to gauge the health of the real estate sector.
  • In Real Estate Investment Trusts (REITs), portfolios will be created of properties whose stock prices are used to determine and analyse industry trends.
  • Survey and market analysis of the real estate will be conducted by DG IMP.
  • Its job will also include documentation of financing and insurance in real estate.
  • Forensic analysis of areas of real estate that are prone to tax evasion particularly the collection of Withholding Tax (WHT) in real estate.

DG IMP will immediately start the Identification of high-end properties on sale and rent through internet and will conduct discreet video surveys of new and upcoming real estate projects.

Implication for real estate

As already mentioned, some of the most impactful changes made to the real estate in Budget 2018-19 will finally begin taking effect. There was a significant amount of confusion about when DC rates and FBR rates will be abolished since the announcement had been made on that but no action had been taken. Now, that can happen.

In the long run at least, as has been increasingly obvious over the past couple of years, we are heading towards greater documentation and formalisation of the overall economy and real estate. This also means that the state of caution in which the real estate has been for the past year in particular will continue for some more time before the new regime becomes established as a norm.

Some of the direct, significant, and perhaps immediate implications will include:

  • DC rates and FBR rates will be abolished.
  • Declared value will be considered for taxation.
  • To discourage undervaluation of property, undervalued property can be bought by the government through DG IMP within six months by paying 100% above the declared price.
  • WHT regime will become stricter.

What are your opinions on how the real estate sector is progressing? Do you have any questions about it? You can talk to us in the comments section.

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Muhammad Farhad
Muhammad Farhad is a Content Developer at Zameen.com.

  1. What does it mean by abolishing DC and FBR rates and considering stated or registered rates?

    1. Under Budget 2018-19, DC rates and FBR rates will be abolished. For taxation purposes, the declared value will be considered.

  2. currently cost of transaction is around 7% after abolishing DC/FBR rates cost of transfer will increase.

  3. I BELEIVE MASSSIVE FALL IN PRICES OF PROPERTY COMING AHEAD..LETS BRACE OURSELVES AND GET OUT WHILE WE CAN OF PROPERTY HOLDINGS….PROPERTY WILL COME BACK TO ITS ORIGINAL VALUES AND NOT THE SPIKED UP VERSION WHICH WAS A SHAM AND OVER INFLATED SATTA MARKET…PROPERTY IS GOING BACK TO 2008 RATES…PROPERTY BUBBLE IS BURSTING ANYDAY NOW

  4. Amir is right to the core, the property market is already heading down the hill. In the next five years, none should expect big gains from the property market, rather expect at least a 50% fall in the prices.

    Those who were forming housing societies and were grabbing plot files in 100s, are set to loose in a big way.

    Following will be the decisive factors to pull down the property market to its knees:

    1. The demand that was being generated in the cities is going to be taken care of by the cheapest Naya Pakistan Housing Scheme. As a result, there would not be crowd buyers in the private lands and housing societies.

    2. The tax regulations, would not allow any major investor to come and invest in the property and start paying heavy taxes.

    3. The overseas Pakistanis are no longer interested to invest and then pay tax and face the devaluation of their overseas dollars as well.

    4. Any new increase in the property shall be slow and gradual basing on the real developments on ground.

    5. Shortage of houses in the cities would cut down and so do the rents.

    So, anyone, who is still holding bulk or plots, should get out of it, as quickly as possible.

    1. Thank you for your analysis. Don’t you think that prices will adjust much quicker than five years? Once they have adjusted to the new market situation, wouldn’t they be expected to rise again, albeit slowly because NPHP or not, we do have a housing shortage and that ought to be a contributing market force in any case.

  5. Considering Mr. Farhad as subject expert, please let me know if it has implemented or yet to be implemented. I am planning to buy in DHA phase 8 around 20M and trying to get the idea about additional cost to be paid for the transfer. If considering this law has implemented, I what to how much I have to pay the WHT?

    1. My understand was that WHT might be different if you are buying on instalments, if you are not, it might not be much different. As far as implementation is concerned, I will confirm and get back to you as soon as possible.

      1. Dear Farhad, Many thanks for your input. I am buying in DHA phase 8 Lahore and it is not at instalments. The price will be around 21 M. appreciate if you can guide me that what kind of taxes I have to pay and what price will be published in my return. my aim is to mention the actual purchase price in my tax return. waiting for your response.

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