KARACHI: Chairman of FPCCI Standing Committee on Urban Development and Chairman of Kay Kay Builders, Munir Sultan, has suggested following proposals for the real estate sector.

Registry system: The government must develop an electronic registry system and keep record of attachments in order to reduce issues of litigation pending in different courts. This will discourage illegal buying and selling of properties with fake and vague documents.

Property valuation: The government should ensure fair property valuation and documentation across the country’s real estate market and for this purpose it should introduce a proper accounting system.

Packages and housing bank: Financial packages may be devised in a manner where access to housing credit becomes easy. The government should direct banks and financial institutions to provide house construction loans instead of house purchase loans and establish a national housing bank to finance home construction.

Property tax: To promote home ownership, the government should give incentives and in this regard property tax should be rationalised and reduced to 5 per cent for self-occupancy.

Mortgage loans: Financial institutions should be encouraged to give mortgage loans for house construction purposes at a little below market rates.

Corporate tax: To give relief to listed companies by reducing corporate tax rate to 30 per cent to encourage public participation, investment and development of capital markets.

CVT: Levy of two per cent capital value tax on property transactions was not a revenue measure, but it has been instrumental in stabilising prices of property. There has been a sharp decline in prices of property since the imposition of CVT on buying and selling of plots. It is suggested to the Federal Board of Revenue to continue this levy.

Refinance: Housing refinance window should be set up at the State Bank of Pakistan for long-term funds.

Mark-up and stamp duty: Mark-up on housing loans for individuals should be treated as an expense in tax return. No stamp duty registration fee should be charged on housing mortgage.

BMR: Banks should extend credit facilities for balancing, modernisation and replacement (BMR) of machinery used in the housing and construction industry.

Duties: Duties and taxes on major construction materials should be rationalised and reduced to make construction more affordable.

Contractors: Local contractors should be treated on a par with foreign contractors in all financing matters ie guarantees, terms of payment, penalties, etc.

REIT: The government should offer lucrative incentives under the Real Estate Investment Trust (REIT) concept. It should focus on areas like acquisition of land, mortgage finance, commercial fee and land bank under the REIT.

Tax base: The FBR should broaden the tax base instead of levying new taxes or continuing with high tax slabs. Reduction in tax rate and its shifting to new sectors would help improve industrial, commercial and entrepreneurial activities, which in turn will help create more employment and broaden the tax net.
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