A Ray of Light for the Secondary Real Estate Market? Read the April 2019 update to find out.
Real Estate sector bounces back
Source: The Financial Express
Date: 1 March 2019
The article highlights the revival of real estate sector in recent times owing to a number of factors including improved socio-economic condition, low-interest home loan facilities for government employees, political stability besides others. All these factors have bolstered buyers’ confidence to buy flats. Over the last six months, real estate business has increased by 20-30 percent.
In the REHAB Fair held last month, over 28000 prospective buyers visited and booked flats, plots, commercial spaces worth Tk. 15 billion. In the inauguration of the fair, Senior Vice President of REHAB Nurun Nabi Chowdhury recommended establishment of Tk. 20 billion refinance fund to fulfill homeownership dream of lower and middle income families as well as recession of registration fees for flats and plots. Meanwhile, Md. Mosharraf Hossain Bhuiyan, National Board of Revenue (NBR)’s chairman, said that the flat registration fee might be slashed in the upcoming year as a new VAT law would be implemented.
In addition, most banks and other financial institutions gave home loans with interest rate of 10-11 percent at the fair. As per Bangladesh Bank rules, banks can offer up to Tk. 12 million but this rule is not applicable for non-financial institutions that can provide home loans worth more. Currently debt equity ratio for home loans from banks is 70:30 for Bangladeshi residents and 75:25 for NRBs. Apart from ease of home loan processing, home loans are also being offered outside Dhaka nowadays.
However, although real estate sector is under revival, there are still bottlenecks in the industry. One major issue is the lack of a central database. For example, there is no information on real estate developers operating outside Dhaka. In addition, for approval of one project, realtors need to visit at least 10 different organizations. For this, a one-stop service center would greatly help the realtors as well as consumers. Another challenge plaguing the real estate sector is the rapid urbanization which exerts pressure on land as well as deteriorates quality of life in the city. This is why decentralization of Dhaka is very much relevant to current real estate industry to solve the housing problem in urban and rural areas.
Consumer rights law to safeguard tenants
Source: The Daily Star
Date: 12 March 2019
The article highlights incorporation of several consumer services under the existing Consumers’ Rights Protection Act 2009 to safeguard interests of consumers of respective industries. Under this ACT, tenants and homebuyers can get speedy solutions to violation of their rights by landlords and realtors.
The Directorate of National Consumer Rights Protection (DNCRP) commented that it looks forward to incorporating 25 different services, including property rent, real estate, mobile banking and online services such as e-commerce in the current Consumers’ Rights Protection Act 2009 so that it can handle and solve problems prevailing in these areas.
DNCRP Director General Md. Shafiqul Islam Laskar commented that although the organization receives several complaints from consumers of various industries they cannot take any action against the service providers as those are not enlisted under the jurisdiction. Currently, the DNCRP handles consumer rights in several other areas including transport, telecom, water supply, energy, gas and electricity, construction, etc.
This is a crucial initiative by DNCRP as under existing laws and superfluous policies, rights of tenants are almost close to nil. Meanwhile, currently there is a law on the real estate sector to protect the interests of home buyers. But if any violation occurs, one files a case with courts which is a lengthy process. As a result DNCRP also seeks to incorporate real estate in addition to property rental to its list of services under the ACT. Mr. Laskar added that he expects the revised law would be passed by this year.
REHAB Fair Begins in CTG Tomorrow
Source: The Daily Star
Date: 13 March 2019
The article features highlights of the four-day REHAB Fair 2019 which was held in the port city of Chattogram at Radisson Blu Chattogram Bay View from 14 – 17 March 2019.
This was the 12th edition of apartment fair organized by REHAB. Land Minister Saifuzzaman Chowdhury inaugurated the fair and Abdus Salam, chairman of Chattogram Development Authority (CDA) was present as chief guest.
Before the fair, a press conference was held at Chattogram Club where Vice President of REHAB Abdul Kauiam Chowdhury requested government to cut down the high registration fee.
The fair had around 76 stalls with 56 companies participating, which included realtors, building materials manufacturers, banks and financial institutions.
Sheltech starts housing fair to mark anniversary
Source: The Daily Star
Date: 18 March 2019
The article features highlights of a 12-day apartment fair hosted by real estate developer company Sheltech. The fair was organized marking the 31st anniversary of the company. The fair started on 12 March at Sheltech Lounge in Panthapath.
In the fair, Sheltech showcased its ready condominium project Sheltech Bithika located at Mirpur. The project comprises 100+ apartment units plus commercial spaces as well as amenities like swimming pool, gym space, etc. The fair had special offer of free electrical appliances, including air conditioner, television, and refrigerator, etc. The apartment fair also showcased other projects in Gulshan, Dhanmondi, Hatir Jheel, Banani besides others.
Chances of TAX and VAT reduction: Initiative to develop secondary market in real estate sector
Date: 1 March 2019
The article features scope of TAX and VAT exemption to create a secondary market in the housing sector geared to facilitate home buying of lower income and middle income people. This exemption might be incorporated in the budget of the next fiscal year according to speculation of National Revenue Board (NBR), Public Works Department and concerned realtors in a recent working committee meeting.
Realtors commented that real estate sector has been stagnant for quite a few years as a result of high registration fee, stamp duty and TAX. For instance, home buyers have to pay an additional 17% as registration fee on top of the apartment price. This makes home buying a difficult endeavor for people with limited income. Apart from reducing existing registration fee of apartments, members also commented that in many countries there is a policy of paying reduced registration fee and TAX when a product is resold but in our country every time a property is sold, buyer has to pay same registration fee and TAX which hinders development of the sector and discourages buyer. To develop secondary market this issue needs to be addressed. Currently registration fee of new apartments and plots comprises 4% gain tax, 3% stamp fee, 2% registration fee, 2% local government tax, and 3% VAT. REHAB members urged this amount to be reduced to 7%. Apart from this, realtors also proposed to reduce income tax rate to Tk. 500 per sft for residences in Gulshan, Banani, Baridhara, Motijheel and Tk. 1000 per sft for non residential projects.