Taxation, registration fee hikes push housing industry into dire straits: Kamal Mahmud

Everyone, the low and middle-income people in particular, dreams of having a home of their own but that dream has been shattered after the proposed budget for the 2023-24 fiscal year was rolled out.

As of now, many low-income citizens became flat owners due to the sheer efforts of private developers. But now it seems that flats will once again become a high-end commodity. The slogan of "Housing for All" will remain a mere slogan.

In the new budget, the government proposed to impose a tax of Tk20 lakh per katha in many areas, or 8% of the contract value, instead of the existing 4%. There is also a condition that whichever is higher must be paid, which means a tax of roughly Tk20 lakh per katha and in some cases, the amount could be even higher. This is applicable to land only. 

In the case of flats, the tax was 10%-12.5% earlier, which will be 14%-16.5% now. Can you imagine what this tax increase will do to the housing sector?

On behalf of the Real Estate and Housing Association of Bangladesh (Rehab), we (real estate businessmen) proposed the government set this tax rate at 7%. I have been making demands to the media and authorities concerned for a long time. There was a time when the tax rate was 15% and the sale of land and flats plummeted. The proposed tax increase will bring this sector to stagnation. 

The housing business is in crisis already due to various reasons including soaring prices of construction materials. But there is no initiative in the budget that could bring relief for us. On the contrary, land-flat registration fees have been increased.

Apart from increasing the registration fee in the proposed budget, additional duty has been imposed on at least 12-13 products including cement, stone, tiles, lifts, ceramics, glass, switches, sockets, cables, and kitchenware. We who build flats are the buyers of those products. Flat prices will go up again and the buyers will have to pay the eventual price.

All in all, many will lose the ability to buy flats in the days to come and real estate traders will lose buyers. Housing will become more difficult for lower and middle-class people.

REHAB has approached various organisations over the years to make demands related to housing ahead of the national budget but none was reflected in the proposed budget.

Due to the lack of policy support, the country's housing sector has come under serious threat. Additional taxation will push this housing sector into dire straits.

Kamal Mahmud is the first vice president of REHAB.