New VAT law to hurt housing sector: REHAB

The 15 percent VAT on rod as per the new VAT law will increase the cost of construction further, said Liakat Ali Bhuiyan, acting president of Real Estate and Housing Association of Bangladesh (REHAB).

He spoke at a pre-budget discussion on the upcoming national budget, at Cirdap Auditorium in Dhaka yesterday.

He urged the government to refrain from imposing fresh VAT on the sector, which has been facing a slump in business for a long time due to the high construction cost.

Bangladesh Bank should launch a refinancing scheme for the housing sector, to make the flats more affordable to the buyers, he said. The refinancing activities of Bangladesh Bank for the housing sector have remained shut since 2009.

The association demanded the government form a special fund of at least Tk 20,000 crore for the sector.

The buyers should be able to take long-term loan from the fund at low interest rates, according to their budget proposal.

Bhuiyan demanded the registration cost be reduced to 7 percent of the total cost of a flat or apartment, down from existing 14 percent.

He said investment of undisclosed money is increasing in the housing sector due to the high registration cost. The registration cost is the highest in Bangladesh among the Saarc countries, he said.

The government should allow investment of undisclosed money in the housing sector without any question, he said.

Referring the recent Global Financial Integrity report, which disclosed illicit flows of $75 billion from Bangladesh, he said such illegal outflow can be stopped by allowing undisclosed money at unquestionable condition.

The leaders of the association demanded launching of a secondary market for the housing sector similar to the used car market.

If a flat is sold within five years of its purchase, then its registration cost should be 1 percent, he explained.

Abdul Kauiam Chowdhury, vice president of REHAB, was also present.