What is happening in the current real estate sector of the country & surrounding countries? April 2017 Update

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May 1, 2017 Real Estate Industry

Get the latest scoop in the industry from various dailies and stay up to date with the real estate market in Bangladesh and its neighboring countries.

“REHAB demands Tax Reduction for Flat/ Plot Registration”

Source: Prothom Alo Date:  4th April 2017

The article highlights the issue of high tax and registration fee in real estate sector of Bangladesh. According to the article, currently flat buyers have to pay 14-16% tax fee during registration of apartments and plots. Real Estate Housing Association of Bangladesh preceding the budget of the upcoming fiscal year asked the Government to reduce this amount to 7%.

Currently, registration costs 4% revenue tax, 3% stamp duty, 2% registration fee, 2% local government tax and 3% value added tax, which means if an apartment buyer purchased a flat worth Tk 1 crore, he has to pay Tk 14 lakh for registration fee and tax. REHAB stated that because of this huge expenditure, many buyers do not register their apartments or plots. For this reason government is losing revenue.

Apart from this, REHAB has submitted a list of demands to the concerned authority before the next budget pertaining to the real estate sector. Among these demands, REHAB has asked opportunity for buyers to invest undeclared money in real estatewithout facing any hassle, which REHAB believes will reduce cash flow to foreign countries.  For facilitating apartment purchase by the middle-income group, REHAB has also asked for the establishment of a Tk 20 billion fund with low-interest rate.

The article also reports that currently, developer companies in Bangladesh have to pay from Tk 600 to Tk 6500 gain tax per sft location wise. However, due to slow market conditions, this tax can be reduced to bolster the real estate industry.  REHAB expects that fulfillment of these conditions will revive the sector.

“Rehab proposes to start secondary market in the housing sector”

Source: Bonikbarta.net Date:  4th April 2017

The article features a pre-budget discussion where The Real Estate and Housing Association of Bangladesh (REHAB) proposed to create a secondary market system for the real estate sector with a special discount on registration fees, stamp duty and gain tax. The organization has proposed to develop the system by giving a chance of secondary sale within 5 years of the first sale. REHAB submitted the proposal to the National Board of Revenue before budget preparation for the fiscal year 2017-2018.The proposal also included introduction of long-term re-financing method, funding of Tk 20 billion and reducing the existing VAT for a certain period of time to revitalize the real estate sector of Bangladesh. REHAB’s vice president Liakot Ali Bhuiyan lamented the lack of opportunities for real estate investment in this country compared to other countries. He stated provision of investing undeclared money in the sector will not only result in an increase in sale of flats, plots and commercial buildingsbut also impact the economic growth of the country as it will stop laundering of money in the name of second homes and will bring investors under the tax payment division.

 “bti Apartment Fair starts today”

Source: Jugantor
Date:  7th April 2017

The article features an apartment fair organized by building technology and ideas ltd, a developer company in Bangladesh. The two-day fair started on 7th April at its Chayabithi project located at Uttarkhan.  The project covers 48.5 kathas and comprises of 158 apartment units. The north facing building consists of apartment units with sizes starting from 935 sft to 1065 sft and is a part of bti’s Standard Collection. The fair also had a special offer for spot booking as well as 4-year installment facility for prospective buyers.

 “Up to Tk 1 crore loan for house building”

Fakhrul Islam
Source: Prothom Alo Date: 19th April 2017

The article highlights the initiative of Bangladesh House Building Finance Corporation (BHBFC) to give up to Tk 1 crore for house building. The state organization also aims to reduce its interest rate. It is introducing home loan facility for farmers and NRBs for the first time.

According to the feature, the proposal to increase loan amount and reduce interest rate has been submitted to Finance Ministry this February. Debashish Chakrabarty, MD of BHBFC stated that the proposal has been accepted even though the organization has not received any formal letter yet.  The company will implement a new policy after receiving confirmation and it will be implemented from 1st July.  BHFC along with its existing seven loan types will introduce 3 loan products more to facilitate the real estate sector. The new loans will include building construction by individuals and groups as well as for the purchase of flats.

For individual building construction in highly developed areas of Dhaka and Chittagong, loan amount has been increased from Tk 50 lakh to Tk 1 crore and for other developed areas, the loan amount has been increased from Tk 50 lakh to Tk 80 lakh. For outskirts of Dhaka and other divisional areas, loan amount has been increased from Tk 40 lakh to Tk 60 lakh.

For group building construction, loan amount has been increased from Tk 50 lakh to Tk 60 lakh in highly developed areas of Dhaka and Chittagong and the rest are the same as individual building construction increment. Also the loan amount for flat purchase before used to be maximum Tk 40 lakh whereas now for buying flats in developed areas of Dhaka and Chittagong, the amount has been increased to Tk 80 lakh and for other areas, the amount will be up to Tk 60 lakh. The article also reports that new interest rates for building construction, flat purchase in developed areas in Dhaka and Chittagong and flat purchase in Tongi and Divisional areas will be 9.5%, 10% and 8.5% respectively.

“You can withdraw 90% EPF to buy home, pay EMI from account”

Source: Housing.com Date: 25th April 2017

The article talks about a new opportunity for Employees Provident Fund Organization (EPFO) subscribers in India who can now withdraw 90% of the total amount from their provident fund accounts for the purchase of homes.

A new amendment of Employees’ Provident Fund (EPF) Scheme, 1952, now facilitates subscribers to make not only down payments but also pay EMI through their PF accounts. From this account, a subscriber can pay outstanding amount to government, banks, housing agency and so on. However, a subscriber has to fulfill certain conditions to avail the facility and each subscriber can avail this facility only once.