The real estate sector – which has been feeling the pinch of the Covid-19 pandemic – found some respite with the reduction of registration fee, a move that the industry players said would give buyers a decent benefit.
The law ministry in a letter on Monday reduced the registration fee to 1 percent from 2 percent of the total price of land or flat, which would bring the effective registration cost down to 10 percent, from 14 percent before December last year.
A buyer of land or flat worth Tk1 crore will now have to pay Tk10 lakh as the registration cost, which includes stamp duty, registration fee, VAT (value added tax) and local government tax, which was Tk14 lakh the previous year.
The buyer will pay 1 percent of the property price as registration fee, 1.5 percent as stamp duty, 3 percent as VAT and 2 percent as local government tax.
The Real Estate & Housing Association of Bangladesh (REHAB) has welcomed the move saying it will help the sector turn around amid the ongoing pandemic situation.
REHAB's President Alamagir Shamsul Alamin told The Business Standard, "Previously, the registration cost was 14 percent of the total price, now it has come down to 10 percent. This is a huge opportunity for buyers of plots and flats, and the move will also have a positive impact on the housing sector.
"We have been requesting a reduction in the registration fee for more than two years. The Internal Resources Division (IRD) and National Board of Revenue (NBR) reduced the stamp duty from 3 percent to 1.5 percent last December. At the same time, a proposal was sent to the Law ministry to halve the registration fee from the NBR. They took extra time to issue the notification."
The then finance minister AMA Muhith took the initiative to reduce the land and flat registration fee in 2017 to curb money laundering.
In 2018, the government formed a committee with the NBR, Ministry of Public Works, Federation of Bangladesh Chambers of Commerce & Industries and REHAB members to address various issues in the housing sector, including the reduction of flat or plot registration costs.
The committee recommended reducing the registration cost to 7 percent from 14 percent to the incumbent Finance Minister AHM Mustafa Kamal.
It had also recommended a reduction in the local government tax and VAT rate to reduce the registration cost, which has not been implemented yet.