Realtors slam tax hike on apartments

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FE Report
Realtors Saturday slammed the government's budget proposal that saw up to eight-fold hike in taxes on apartments in Dhaka and Chittagong.
Finance Minister AMA Muhith said the government took the decision as incomes earned by the realtors is "considerably high", but revenue collection from the sector is "poor".
According to the budget proposal, realtors would pay Tk 2,000 as tax for every square metre of an apartment to be sold in posh areas of Dhaka and Chittagong in the upcoming fiscal year.
The main lobbyist group of the realtors, the Real Estate and Housing Association of Bangladesh (REHAB), Saturday "strongly protested" the proposed tax measures, saying it would "devastate" the industry.
It said the tax was hiked at a time when the real estate sector was charting a revival after years of gloom caused by the global meltdown, curbs imposed by the caretaker government and rising prices of construction materials.
Due to latest taxes, the prices of all types of flats would go up and the buyers would have to foot the additional bill, the REHAB said, adding the realtors would pass the extra cost onto the consumers.
"As a result, the house prices will go beyond the reach of the commoners," it said in a statement.
"The realtors and developers are struggling due to high land prices and high registration fees. Now the new tax will make business almost impossible," said the association.
In his budget speech, Muhith said the prime tax rate would be applicable for flats in Gulshan, Banani, Baridhara, DOHS, Dhanmondi, Lalmatia, Uttara, Basundhara, Motijheel, Dilkusha, Cantonment and Karwan Bazar in the capital and Khulshi, Agrabad and Panchlaish of Chittagong.
For all other areas the tax - which is collected at source from real estate developers at the time of registration of flat or building - would be Tk 800 per square metre.
The realtors currently pay Tk 250 per square metre as taxes.
The tax rise comes after the central bank raised fears that soaring prices of flats in the two cities could create asset price bubble in the housing sector - a burst of which could affect the country's banking system.
The REHAB said the realtors have joined the government's drive to ensure housing for all, but the new taxes could dent their role.
It urged the finance minister to maintain the taxes at the existing rate in order to keep flat price at an affordable rate.
According to the grouping, a record 18,000 flats of different sizes were sold in 2009, mostly in the capital and Chittagong.
The realtors charge Tk 10,000 per square feet in posh areas, while the prices are Tk 4,000 in the relatively under-developed areas.
Realtors said the tax would also upset their plans to reach other major district towns and tourist hubs such as Cox's Bazar and Kua Kata.
Construction of thousands of apartments and studio flats are underway in Cox's Bazar, where over 150,000 tourists, both domestic and overseas, thronged daily during the peak season last year.