Until now, only real estate agents were seen raising their voices against the increased property taxes – a development that adversely affected real estate transaction volume across the country. Now, we are receiving similar reports from the departments concerned, which, reportedly, have also seen a considerable drop in the revenue collected in the form of property transfer fees. It seems the matter regarding the increased taxes and its impact on the real estate industry is set to take an interesting turn.
According to news sources, the Lahore Development Authority (LDA) bore a loss of PKR 130 million in the revenue collected through property transfer fees. Even more startling is the fact that this loss was recorded in one single month. Reportedly, the LDA collected an amount of PKR 150 million in the month before the new tax regime was implemented, which has now plunged to a mere PKR 30 million. This drop has raised financial concerns for the civic authority.
While the LDA has already found it difficult to deal with drop in market activity, we can only imagine how hard it must have been for hundreds and thousands of folks related directly and indirectly to the property industry. Reportedly, the LDA office has seen a massive drop in the number of people looking to transfer property to their name, which makes it obvious that real estate agents, too, have little or no clients. It must, however, be noted that genuine property buying and selling continues.
According to LDA’s record, previously the office used to receive 30 applications on average for property transfers daily, making the authority earn PKR 5 million per day. Now, if we do the math, not more than three people visit the LDA office for property transfers. In other words, the property transaction volume has dropped by 90%. If we look at the LDA’s current revenue, there has been a drop of 80%, which is pretty much the situation of the real estate sector on the whole.
With the new tax regime in place and its effects on the market, it is difficult for the departments concerned to raise appraised revenue from the property sector. In such situation, rolling back some of the property taxes seems indispensable; let’s see how soon that happens.
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I think this is something which we should expect. If you talk to any investor or general citizen, none is thinking to invest.
Some are even diverting their investments to UAE. I guess this new tax will benefit UAE more than Pakistan. Keep in mind our Finance Minister was earlier the Investment Adviser for UAE government.
They don’t have stakes in Pakistan our PM children are investing in UK and finance minister off spring are investing in UAE why they would think for us.
you are right – but this is also an evidenced that the property sector was the paradise of all black money holders who were and still have the monopoly to increase and/or decrease the price of any property 50 to 100% within short period even day to night.
Not bad idea from the government to know the source of income while investing in any sector. Further applying taxes is not only an act in Pakistan – it is worldwide.
You are 100% right that our leaders should invest within Pakistan instead of overseas. – I think they have handsome investment within Pakistan as well – but with different names etc…
Lets see the taste of new taxes and effect / impact on our economy – if positive and people do not come in the streets to protest then its fine. Otherwise government should not take into consideration the interest of few hundred real estate agents and ignore 200 million people out which 80% even can’t think to buy property for their genuine needs and wants. Now may by there is a chance. Before the tax applications which is not something strange – the end user was getting the deal more than 300% more than actual market price as the property of the seller was with one agent and then the 2nd and then 3rd and some times the 4th and while reaches to end user an extra juice were taken out.
Agents have made enough money in 30 years and lets the poor people to look the dream of their own home with the fair market and clear crystal deal.
The overseas who send money regularly are and were the victims at largely as their money is hard earned but they invest in real estate they were robed with 8 hands collectively.
Well done government and it urged to apply the same to other areas of investment wherever it is seen have black money. Government needs vote from the people and real estate agents also should be taken care applying the rule and regulations for their survival.
TAXATION WITHOUT REPRESENTATION, IS TYRANNY !
It’s quite obvious now, as to why, one of the few ‘Performing’ Sectors of Pakistan’s economy [Property sector] has sunk … Because, it was uprooted from it’s foundations … most tragically, by a businessmen run government, that knows all about the NEGATIVE impact of disturbing the ESTABLISHED PRACTICES based Order … especially, when without a VIABLE FALL BACK arrangement.
Not denying the fact that few representatives of the Property sector, did have a few meetings with the Finance minister on the subject of of his proposed structural Changes … where Property sector representatives gave a sort of conditional consent to the NEW ORDER … not a Business, but a DEMOCRATIC consent and agreed to ‘help’ the State.
However, the IMPACT of the consent has proven … that ‘uprooting’ a Performing sector of the economy, without making any Viable alternative arrangements … was a wrong business decision … and it should not be allowed to be made the ‘thumb rule’ of any future Changes, vis a vos Economic policy …
Therefore, if the Property Sector has to be revived … immediate REVERSAL to original Practices, is now become an imperative … where the affected Change, must be deferred till such time, a practicable and Viable Business/Revenue arrangement is available …
Like politics, any Change in Business, is best when GRADUAL … because, any abrupt Change, enforced hurriedly, is neither equitable, nor Viable, hence, it is neither practical nor followed by business men …
Thus, it is best to allow Businesses to EVOLVE freely on their own Steam … make small changes that improve the sector and thus, by default, generate larger volume of Taxes … Avoid the urge … or urgings … to take Quantum leaps … by Sikhkha-Shahi type Ordinances based, arrangements …
This all due to Nations overall selection criteria. We will reap what we harvest. So wait for more swings. We cannot expect better decisions with this regime in helm of affairs
This is confirmed from rulers actions that they are disloyal & dishonest to the motherland.
Afsos , inhi corrupt logon ko awam bar bar select krti hai , jab azab ata hai to yehi log rotay hain , Jahalat ki intihaa hai yar …….
In fact our government has purposefully done all this to destroy the livelihood of so many people related to real estate. This clearly shows their real agenda toward the people and the country.
I don’t expect he is that naive to not know the impact of these taxes and policies.
@saeed it is every citizen right to pay taxes to the government. All real estate agent are blaming the taxes game on the government just because most of them earn money from the investors who have black money (illegal) or did not pay their taxes to the government. Actually its a mafia game or monopoly who raise price of property to the millions in days, this is really injustice for those people who want to purchase the property for their living with their white money. I know many people who did the the same, a plot price increase 1 million in 10 to 15 days which is really really unfair. Everyone show patriotism but when their turn come to show the patriotism they came on back foot. It is for sure if we will not keep balance then we will destroy our self.
which patriotism are you talking about. Everyone knows that our rulers have investments in foreign countries, therefore whatever happens in Pakistan is none of their business. If the decision is really that good then I think no need for this article, which is showing the ground reality of property market after these changes in rules. Governments all over the world work day and night to increase foreign investment to their country however our government works day and night to discourage foreign and local investor. And they are losing heavily on the tax front also as evident from this article. So much for patriotism.
Seeker bro , aj ki news bhi parh gas prices 36% barha di gayen aur MNA’s / MPA’s ke lye overall 9 billion rupees ke gas pipelines / connections ki manzoori di gaye , jis ka bojh bhi awam par taxes ki shakal main daal dya gaya , mere bhai hmne taxes denay se inkar kab kiya magar hamaray taxes se ayashi corrupt rulers karain , ye manzoor nahi . Agar humse taxes lene hain to phr hamain west ki tarah facilities bhi dain . Rishwat ke baghair to yahan koi kaam nahi hota …..
Current & last rulers have devastated business environment of Pakistan. Unemployment & poverty is the worst curse given to the masses. Illiteracy & masses casting vote on various prejudices is main case that Pakistan has the worst rulers in the world. We cannot get out of this vicious circle.
Well if you make such critical business decisions without involving the concerned sector, you’re bound to see such disaster. Then already tax loaded commercial sector can’t take such huge tax as imposed by the Govt. Govt should rethink its policy and reduce the tax to an acceptable level. Otherwise industry and commercial sectors are already doomed.
Brother Syed Javed Sahib,
We overseas know how the agents were looting and cheating the overseas while buy and/or selling their property. No big tax, its normal. The majority of the people are happy because in this way they will have chance to have their dream home. Because black money will taken out and if this is happened its good for the nation and country. Don’t look to just few hundreds real estate agents but look to 200 million people. I think you will realize the victimization of the end users.
Isnt that what the government should work towards i.e. benefit the masses instead of the few? The property market has been messes up simply due to speculation by propert dealers, which was putting undue pressure on the middle and lower class who genuinely want to own a home. As much as I do not loke the other policies of the current government, this one I have to give full marks on.
Yes i am agree with you. Now middle and lower class who genuinely want to own a home can buy.
You have drawn a picture which is 100% true. Due the outflow of black money from the real estate sector, may by middle and poor people have a chance to have their dream home. Government should stick to his tax application for the same of 200 million people. But Government should also take into consideration the interest of the real estate agents apply some strict rules and regulations.
Well done government
AGREE WITH YOU…GENUINE BUYERS SHOULD BE ABLE TO AFFORD A HOME AND PROPERTY IS NOT FOR SATTA IT IS FOR EVERYONE TO LIVE IN THEIR OWN HOME
taxes will benefit the original buyers in long run.
Sorry. but this tax is not anything unusual. every developed country does this. it is a necessary correction to normalize the market, track sources of money and drive out the black money economy in which the middle class and lower are squeezed out. how can there be new buyers if a plot 500 is touching 3-5 crore? in the long run it will benefit people. it will allow a fair market price and the prices vs earning vs affordability will stabilize. it is good for the general masses.
agree
YES NASIR XCELLENT DECISION BY THE GOVT THIS WILL FLUSH OUT BLACK MONEY AND GENUINE BUYER WILL COME IN MARKET AND HYPER INFLATED PRICES SHOULD ALSO COME DOWN GOOD FOR GENERAL PUBLIC WHICH IS THE SILENT MAJORITY…WHILE THESE DEALERS N PROPERTY MAFIA PUTTING PRESSURE ON GOVT TO SAVE BLACK MONEY INVESTMENT IN MARKET
Every time a good initiative is taken, resistance is shown by people who are driving undue benefits. The govt needs to stay put and not kneel infront of the pressure being created by these pressure groups.
Property prices are over inflated in Pakistan and it has become nearly impossible for the middle class to build even a small house for themselves. This is a very good initiative by the govt towards bringing the sector in the tax net and regulating the black money involved the real estate sector. This should bring the over inflated prices of plot down and if this to happen even at the cost of investment diverting to other countries, so be it. But this is something which has to be done for the betterment of the common people.
Good Day Fellows,
Merely 2 % of our population is giving tax. Is this country belongs to property dealers/ property investors only? A total count of these people is not more than few thousands, and the hue and cry they are orchestrating is no way voice of masses. If they are such a loyal citizens, why not to invest in something which creates employment opportunities. Transacting plots only fill pockets of few investors and dealers.
Being a tax payer, If i Invest in property, get a substantial margin of 15% supposedly , why should i make my money black by not giving tax to government. I earn , govt earn , its a win win situation.
We accuse our country all the time, visualize Europe and US as dream world, believe me individuals pay up to 40 % tax on their earnings. In last 70 years, we are running a parallel undocumented economy.
I too invest in property but am happy to pay taxes, and fully support new tax regime because my money is no more black. Am happy that this tax I pay is used in making infrastructure of my country and am playing my part at least. ( Am not a PMLN voter anyway).
Pay your taxes yourself please. Your will be the major contributor to growth of your country. Since we got a CNIC number, no matter what we transact is being tracked. So its matter of time that non tax payers will feel suffocated and hard to breath, if govt ( whosoever rules either PMLN or PTI) become serious to collect. By the way, wait for PTI government to rein in and expect a collective tax of 40%.
Well, someone needs to inform this to Mr. Haroon Akhtar because just yesterday he was telling Kamran Khan that there is an increase of 25% in transactions during August and September. Whom to believe? Yes, if you visit real estate offices or any developer’s offices including DHAs and Bahria Town, you clearly see vacant chairs, which was rare earlier.
Anyways, we need to wait and see.
Good for the genuine sellers and buyers. Well done. Stick to it.
GR8 DECISION BY GOVT…WE SHOULD PROMOTE THIS GOVT DECISION AS IT IS FLUSHING OUT BLACK MONEY FROM OUR ECONOMY WHICH IS A GOOD THING AND WILL GIVE BETTER RESULTS IN THE LONGER RUN WHILE THERE WILL BE HINDRANCES IN THE SHORT RUN BUT GENUINE HOME BUYERS ARE VERY HAPPY WITH THE DECISION OF THE GOVT
It is a good step , now hopefully the rates of property will be lower .So that the actual buyer can buy the property instead of investors holding plots and depriving the rightful people to own the property making dummy prices.
Very weĺl done and good work regarding tax collection by government of Pakistan we must appreciate mr ishaaq Dar do more please every pakistani must pay taxes for batter future of our lovely pakistan and please take more actions against high property prices this is we all need decreased more property prices because that was a bubble and still prices is to much high this is very unfair but I hope property prices is going down day by day insha Allah ..
until Pakistani real estate becomes garbage
Most of the above posts have predicted a decline in property price and a relief to genuine buyers. But the property price have not decreased over the last month. What is the reason?
The question is why to hit the tax payers? This is a highly unbalanced policy and has hidden agenda as shared by MJ Khan and others. If the objective was to check black money then there must not be any taxes for a genuine tax payer and non tax payer must submit details of source of money and should pay heavy taxes. Why a honest tax payer is forced to pay higher taxes and why is he forced to stop thinking of owning a home. The objective as declared y the Government is to bring the prices down but what happened is that the property is still out of reach of a common citizen. This policy is totally focused to divert investment to UAE. It’s very evident. Look at the revenue collection on part of tax collection and see the volume of money being sent out of Pakistan. Look at the difference between buying power of common man and the available property prices. How many deserving people are able to buy plots and homes? They simply cannot afford to buy one so where are the results that were promised?
Common does not have to buy property right in the middle of the city, when we bought land for our house, people were scared to go to the area because it was isolated but today after 30 years its the most attractive location. You want honey in your mouth right away then its different story
This is what our Finance Minister wanted he knows what he is doing, he is chattered accountant
The most devastating thing done. They cannot achieve the goals like such dictatorial decision. They crippled the tax generating sector which they were receiving in the form of stamp duty, adv income tax, cvt etc. They should introduce some amnesty along with rolling back the new taxation system. Yes, they can make it mandatory for investors/buyers to become tax filers and there are many solutions but if they are ready to think.
I went through all comment, they are very real and true. Long story short, When we would see unrealistic prices go down pior to Nawaz or Zardari government? Who would determine the realistic prices? Pakistani Property market and stock exchanege are save heaven for black and dirty money and guess no one would defeat the system.