In response to the increase in property transfer fees, a number of property dealers protested outside the Lahore Development Authority (LDA) complex in Johar Town, Lahore on Saturday, June 28, 2014. The protestors claimed that due to the increase in the property transfer fees by up to 600 per cent, their business would suffer. On the other hand, a senior LDA official expressed surprise that the protest was staged by the real estate agents and not the property buyers and sellers.
In my view, changes in property transfer fees undeniably affect the realtors – if not directly then definitely indirectly. Realtors’ earning is closely related to market activity, ie sale/purchase transactions. Change in the property transfer fee affects the market activity and the increase in the property transfer fees somehow bars the property investors from undertaking frequent real estate transactions, which in turn affects the business of real estate agents.
The LDA official’s expression of surprise over the protest staged by real estate brokers is itself surprising, as the LDA official stated that due to the increase in administrative expenses, increasing the transfer fees became a dire need.
In Dubai, the property transfer fees were increased by the authorities concerned from 2% to 4% last year. However, it was reasoned that the property transfer fees in Dubai were increased to curb property flipping (a process in which an investors buys a property and then resells it after a short period to time to earn profits), not to meet increased administrative expenses.
If you are a realtor and reading this post, I would like you to share your views on increase in property transfer fees in the comments section below. Is the LDA wrong to assume it doesn’t affect your business?
Let Zameen be your voice.
Related News
The comparison of Pakistani Property market with Dubai is not relevant. Transfer fee increase in Dubai was aimed to discourage short term flipping of property which was the main reason of property bubble in 2007. However this is not the case in Pakistani property market where prices increases gradually.
Dear Mr Hammad,
Increase in property transfer fee in Dubai was based to curb flipping. But in Pakistan the reason for increasing property transfer fee (as mentioned in the article) seems illogical,
Basically, you both are saying the same thing.
I am not a realtor, but wnat to know if I am a buyer and buy a property of value 20 MPKR, how much property tax I’ll have to pay
Dear Mr Mubasher,
Per marla transfer fee has been increased to Rs 7000, according to a news source.
Prices increase in Lahore and other cities R due to Profit Taker Investors. Thoes investors should have the Problem of aborbing the Tax Increase. They R still making Millions. On the Other Hand Rs. 7000/- is too low. It should be atleast Rs. 25000/- per mirla.
the Q of Mubashir is about the property tax and the answer given is about the transfer fee.
Shah … 25000 per marla means 5 lac transfer fee to the developer on a plot sizing 1 kanal. I think 7000 is quite okay i.e. 140,000 on 1 kanal plot.
Price increase in Lahore and other Big Cities of pakistan is due to PROFIT TAKER INVESTORS. Thoes Investors should NOT have the PROBLEM of absorbing the TAX increase; Cuz they they R still making Millions. On the other hand Rs. 7000/- is Too Low. It should be at least Rs. 25000/- per Mirla to Dampen the Speculative Real Estate market.
I wonder what agents would do if transfer fee is increased to Rs 25,000 per marla. They staged a protest even against recent increase of transfer fee to Rs 7000 per marla.
When price of a 5 marla house is hovering around 10 million, serious measures should be taken. Increased transfer fee and increased WHT on property gain is mandatory to keep living costs down. The circus of last year must end. I must add that genuine buyers shall appreciate such decisions because bullies shall be thrown out of market. Better late than never.
Really? 5 Marla House is hovering around 5 million? I am startled to read that.
Investors may not accept the increase in property transfer fee.
Increase in property transfer fee affects everyone who has anything to do with the real estate business.
It is correct that the fee is payable by the buyer/investor. But it’s only natural that the buyer should calculate the total cost to him/her, i.e. amounts payable to the seller, the agent/dealer, all kinds of fees related to the transfer (whether stamp duty, excise or vat), to the deeds writer, the notary public etc etc. This would bring about a negative pressure on property prices. The sellers, unless in distress, would most likely wait for the prices to improve. The overall market pace would obviously slow down affecting everyone. The dealers are, therefore, rightly protesting. The unnamed official’s response of Tuanu Kee is patently wrong.
Dear Mr Pervaiz Saleem Hoti,
I second you comment. Thank you for sharing your views with us.
I WANT TO KNOW IF THIS TRANSFER FEE IS THE SAME WHAT WE CALL REGISTERY FEE OR INTIKAL FEE FROM THE GOVT. I JUST BOUGHT 4 KANAL PLOT IN B 17 AND IT WAS TRANSFERED TO MY NAME IN LAND REVENUE RECORD OFFICE IN APRIL/2014. WILL IT BE AFFECTED OR NOT? PLEASE HIGHLIGHT THIS. I LIVE IN CANADA, AND IN PAKISTAN THERE IS A NEW LAW EVERY DAY. PLEASE INFORM ME IF AM SAFE.
Dear Mr Khan,
LDA has increased property transfer fee, which is likely to affect all the societies that that are operated under LDA.
Registry and intekaal are related to non-cooperative housing societies, as per my information is concerned.
I haven’t received any information about increase in property transfer fee by CDA. And since B-17 operates under CDA, so i don’t think that you will have to face any such issue.
There are new laws, amendments to existing laws happening on daily basis in every country. Pakistan is no exception. Laws don’t apply back dated unless specified otherwise, which would be an exception rather a norm. So anyone who have bought the property and have completed all the transfers before this proposed law come into effect, don’t have to pay anything.
A 600% increase if indeed is true, is a big cost to the buyer. I’d definitely think many times before buying. It would certainly make open files more valuable as you don’t have to pay big transfer fees as far as I know. Instead of charging per marla, govt should charge a fixed percentage, like 0.5 – 1 % sounds reasonable. In UK, stamp duty starts from 1% and goes up for properties worth more. In this way, rich pay more when they spend more and middle class and poor dont have to stump a big fixed amount for small properties.
Dear Mr Rasheed,
Defining slabs for the property transfer fees seems to be reasonable idea.
I think property tax should be Rs.25,000 per marla and there should be a ban on sale of a plot for more than two time. A residential plot should be allowed to be sold out for only two time then its owner must construct a house/building on it. It will discourage the investors and profit takers to invest in residential plot and the prices of residential plot will decrease. It will help real buyers to buy and construct a house and reside in it.
I cannot understand the protest,
if increase is 7000 rps per Marla that means 70000 pkr per 10 Marla ,,
transfer fee in bahria and dha for 10 marla is higher than that, so why this outcry , it seems fishy,
and also shows something very wrong in real estate . IN Pakistan there are millions of ppl without houses , only bcz of unafordable prices [ created by gamblers,eg agents for quick transactions earnings], if the agents just relies on their genuine commission [halal money] and let the buyer and seller sit in front to front for the deal,only then can be some progress in decreasing gambling in this market , and for that fortunately or unfortunately the transfer fee should be increased even more ,
so that less ,but genuine buying and selling happen,
What is exact transfer fee of one kanal plot in lda avenue 1. Pl guide. Thanks