Flats to get costlier

The photo shows high-rise apartments. According to the proposed budget, people will have to pay more to buy flats.Photo: STAR

Real estate prices are likely to go up in the next fiscal year, as the finance minister yesterday proposed to increase tax on developers, to be paid at the time of registration of apartments and buildings.
If the proposed next budget is passed by the parliament, Tk 2,000 per square metre tax will be imposed on real estate developers for apartments and buildings in Gulshan Model Town, Banani, Baridhara, DOHS, Dhanmondi, Lalmatia, Uttara, Bashundhara, Motijheel, Dilkusha, Dhaka Cantonment, and Karwan Bazar areas of the capital; and in Khulshi, Agrabad, and Panchlaish of Chittagong.
The tax will be Tk 800 per square metre in other areas of the country. The current rate is flat at Tk 250 per square metre.
Finance Minister AMA Muhith, in his budget speech yesterday, rationalised the new tax saying, "Real estate business has grown tremendously in recent times. It may be presumed that income earned by the real estate developers of this sector is considerably high. But, the revenue collection from this sector is poor."
In an instant reaction, immediate past president of the Real Estate and Housing Association of Bangladesh, Tanveerul Haque Probal, said the proposed tax is too high, which will somewhat affect the sales of apartments and buildings.
Sadat Hossain Salim, managing director of Rupayan Housing Estate Ltd, thinks although the developers will ultimately recover the money spent in paying the tax from the buyers, it will not affect sales due to high demand.
Salim also sees a positive aspect of the new tax, as it will enhance the government's revenue collection from internal sources, in a disciplined way.
He said the government's promise to ensure accommodation for middle and lower-middle income people will nonetheless suffer a set back due to the new tax, and the recent land registration fee hike.
Although in the current fiscal year the government has allowed whitening of black money through purchase of apartments, the finance minister did not mention anything about the provision's continuation in the next fiscal year.
But a high official of the National Board of Revenue told The Daily Star last night that the opportunity will not exist in the next fiscal year in relation to purchase of apartments.
Referring to ruling Awami League's electoral pledge titled "Vision 2021", which promises to ensure housing for all by 2021, the finance minister in his speech said the prime minister on May 21 inaugurated a project for construction of 22,000 apartments for middle and lower-middle income people in Uttara of the capital.
Construction of 11,000 apartments in Mirpur, and 1,020 more in Mohammadpur are underway, while Rajdhani Unnayan Katripakkhya (Rajuk) is also developing 40,700 plots in other areas of the capital, he said.
Environment-friendly housing estates with necessary civic amenities will also be developed outside Rajuk areas, he added.
About rural housing, the finance minister said the problems of rural housing are quite different from those of urban housing. In rural areas, housing programmes can be facilitated through planning for efficient use of land, he said.