A comprehensive working paper has been prepared on the directives of Prime Minister Shehbaz Sharif to revive Pakistan’s struggling real estate and housing sector.
According to sources, the recommendations put forth by a specially formed task force have been submitted to the prime minister, with a high-level meeting scheduled for February 3 to review and finalize the proposals.
Key proposals under consideration
The task force has recommended several significant reforms aimed at stimulating growth in the housing and construction industries. One of the major proposals includes allowing the construction of additional floors for residential houses.
Additionally, the government is considering granting complete tax exemptions to first-time home buyers. This measure is aimed at making homeownership more accessible, particularly for young families and middle-income groups.
Sources also revealed that proposals to:
- Reduce tax rates on property sale and purchase,
- Abolish federal excise duty on real estate dealings, and
- Provide subsidies to support low-income housing projects
These steps are designed to lower the cost of property transactions and encourage more investment in the sector.
Housing loans
In an effort to further ease the financial burden on aspiring homeowners, the government is also exploring the possibility of introducing affordable housing loans. This initiative would provide easier access to credit for those looking to build or purchase homes.
Real estate experts believe that these reforms could significantly boost economic activity. The construction sector, often referred to as the backbone of the economy due to its linkages with over 40 allied industries, could benefit from increased demand and job creation if the proposed measures are implemented effectively.
Moreover, the government aims to ease property purchases for overseas Pakistanis. One of the key proposals includes reducing the advance income tax from 4% to 0.5%. Additionally, the plan suggests cutting down the federal excise duty and abolishing the late filer category, which has long been a barrier for many investors.
Sources indicate that a high-level committee, formed under the prime minister’s directives, has completed its recommendations. A comprehensive package is expected to be announced soon after the approval of the prime minister and taking the IMF into confidence.
Officials from the Federal Board of Revenue (FBR) have acknowledged that the steep rise in property-related taxes during the current fiscal year has led to a sharp decline in real estate transactions -- by nearly 50%. This drop has adversely affected tax revenues, highlighting the urgent need for reforms.
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