Ministry suggests tax cuts, easy loans to transform housing sector

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MG News | February 01, 2025 at 05:54 PM GMT+05:00

February 01, 2025 (MLN): To rejuvenate Pakistan’s struggling housing sector, the Ministry of Housing and Works has unveiled a comprehensive set of short, medium, and long-term recommendations through its Task Force for Development of the Housing Sector.

The proposed reforms focus on taxation relief, improved access to finance, urban planning enhancements, and a robust growth framework to accelerate development.

Short-Term Recommendations (Within 3 Months)

1. Taxation Working Group

  • Reduction in federal transaction taxes
    • Section 236C (Tax on Seller) from 3% to 4% 1.5% to 2%
    • Section 236 K (Tax on Buyer) from 4% to 0.5%
  • Abolishing the 3% Federal Excise Duty.
  • Reducing stamp duty to 2%. (Provincial Tax)
  • Providing basic exemptions for properties valued at up to PKR 10 million  
  • Shifting non-resident verification to an online system via NADRA
  • Uniform rate for filers and late filers to remove disparities

2. Access to Finance for Housing

  • Reduction in Policy Rate to single digit
  • Reintroducing markup subsidies for low-cost housing.
  • Launching awareness campaigns and financial literacy programs to educate consumers.
  • Collaborating with real estate developers to offer mortgage financing options
  • Implementing fixed-term loans for periods like 5, 10, and 20 years.

3. Urban Planning & RERA

  • Ensuring all building and housing scheme approvals are online and time bound
  • Introducing policies for vertical growth through tax incentives, green building initiatives, and solarization.
  • Relaxing building control regulations and floor area ratios (FAR) to facilitate vertical development
  • Establishing High Density Zones for residential buildings with G plus 2 & 3 permissions

4. Growth Framework for Housing

  • Digitizing approval processes to replace traditional NOCs.
  • Defining affordable housing in monetary terms for targeted implementation
  • Participation of private sector through PPP & joint Venture modes for low cost and affordable housing
  • Permission to acquire 20% unacquired area in planned housing schemes against provision of low cost housing

Medium & Long-Term Recommendations (6 months to 2 Years)

1. Taxation Working Group

  • Abolishing Section 7 E of the Income Tax Ordinance
  • Standardizing and rationalizing stamp tax rates across provinces and ICT.
  • Abolishing CVT in Islamabad and ensuring uniform taxation policies through the National Tax Council.
  • Waiver of wealth reconciliation for investment in real estate and construction sector up to Rs. 50 million
  • Revising property valuations every three years to reflect market prices
  • Introducing exemptions for transaction tax for specific categories, such as low-cost housing, government plots, and first-time homebuyers

2. Access to Finance for Housing

  • Strengthening foreclosure laws for property recovery and eviction.
  • Developing digital mortgage platforms with blockchain-based solutions for transparency.
  • Strengthening PMRC through budgetary support and collaboration with banks for subsidized credit facilities.
  • Encouraging fintech companies to create innovative mortgage financing solutions.
  • Implementing green mortgages and takaful-based housing insurance products
  • Expanding the role of Microfinance Institutions (MFIs) in housing finance.
  • Launching mortgage bonds for easy access to finance.

3. Urban Planning & RERA

  • Developing master plans for major cities through provincial governments.
  • Introducing urban regeneration policies supported by legislation for government and private lands.
  • Establishing high-density zones and utilizing barren and arid lands for planned development.
  • Promoting transit-oriented development (TOD) near transport terminals
  • Ensuring strict enforcement to prevent irregular and illegal housing developments
  • Revising zoning laws to promote vertical and high-density housing.
  • Establishing RERA as per the RERA Act, followed by provincial RERAs.

4. Growth Framework for Housing

  • Developing a National Housing Policy emphasizing low-cost and affordable housing as part of a national strategy.
  • Legislating urban regeneration with pilot projects in Karachi and Islamabad.
  • Resuming the MPMG Scheme to restore developer confidence.
  • Leveraging modular construction, pre-fabrication, and green building materials
  • Enhancing community engagement in housing development and management
  • Ensuring policy continuity through parliamentary approvals.

Copyright Mettis Link News

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