Investing undisclosed money in real estate will make economy more dynamic: REHAB

The opportunity for investing undisclosed income in the housing sector without question in the proposed budget will also accelerate the country's mainstream economy, the Real Estate and Housing Association of Bangladesh (REHAB) said on Sunday (9 June).

Real estate businesses also called for reducing the post-purchase registration fee of plots and flats to 7%, which has been increased to 30% for the upcoming fiscal year from the current 22%.

"This will increase the trend of registrations by showing the actual value of plots and flats and increase government revenue," said REHAB President Md Wahiduzzaman while reading out a statement at a press conference held at the Cirdap auditorium yesterday. 

He said they had raised their demands with the National Board of Revenue and other government authorities concerned before the new budget was placed in parliament.

"We had clearly explained and demanded that the undisclosed money should be invested without question," he added.

In 2020-21, Tk20,600 crore came into the mainstream economy due to investment opportunities with no questions asked. The government received revenue of over Tk2,000 crore, he said.

REHAB thanked the prime minister, finance minister, planning minister, and others concerned for allowing the legalisation of black money by paying a 15% tax, which is significantly lower than the 30% income tax for high-net-worth individuals and the 27.5% corporate tax for companies.

"This is a realistic and timely step," he applauded. "If this money is not brought into the mainstream economy, it will be laundered out of the country. It is a good initiative in the context of addressing both practicality and morality."

The REHAB president said, "We request a change in the method of revenue collection from the real estate sector. If the proposed budget is passed, registration costs will be about 30%. This level of registration cost is unprecedented worldwide, and I propose reducing it to 7%."

He claimed that lowering the registration fee would encourage buyers to declare the real value of land, which would rather increase revenue income. He also proposed introducing a system of providing loans at single-digit interest rates.

According to the trade body, the secondary market for selling old flats is not dynamic. If a 4% registration fee is introduced for five-year-old flats in the secondary market, it will enable low-income people to buy flats and create employment opportunities for many citizens.

Md Wahiduzzaman explained that citizens with limited financial means tend to buy older flats. However, the registration fee for these old flats is the same as for new ones, preventing many people from purchasing a flat even if they want to. As a result, the secondary market for selling old flats is not growing.

In a written statement, the REHAB president noted that not all citizens have the same financial capacity. City dwellers dream of owning a flat, and people's needs change over time. Over the past three decades, REHAB members have handed over about six lakh flats. Due to changing demands, many flat owners want to sell their old flats and buy new ones, or invest in other sectors.

If the secondary market is dynamic, the country's economy will also become dynamic. In many countries, there is a nominal registration fee for selling a flat for the second time. Making wealth transfer easier will increase interest in investing in the real estate sector.

The more frequently properties, including flats, change hands, the more revenue the government will generate. However, the budget does not currently include provisions for facilitating a secondary market. This demand was raised before the budget was presented to Parliament.