PM Shehbaz to Approve Housing Sector Tax Reforms and Growth Plan
(Islamabad: Major Real Estate and Housing Reforms Expected on February 6)
Prime Minister Shehbaz Sharif is set to approve a landmark policy package on February 6, 2025, aimed at transforming Pakistan’s housing and real estate sector. Developed by the Housing Sector Task Force, the reforms focus on tax rationalization, financing accessibility, and policy standardization to stimulate investment and drive economic growth.
Key Focus Areas of the Reform Package
The upcoming meeting, chaired by PM Shehbaz, will address critical challenges in the housing sector and finalize a growth framework. Key recommendations include:
- Abolishing Section 7E of the Income Tax Ordinance to simplify property transactions.
- Waiving sub-section 2A of Section 236C, removing the requirement for 7E declaration and commissioner approval.
- Exempting properties valued up to Rs 10 million from taxation to promote affordable housing.
- Implementing an online NADRA verification system for non-resident property buyers.
- Standardizing stamp duties across Islamabad, provinces, and the ICT.
- Abolishing Capital Value Tax (CVT) in Islamabad to reduce financial barriers.
- Ensuring uniform tax rates for filers and late filers to eliminate disparities.
- Waiving wealth reconciliation requirements for investments up to Rs 50 million in real estate and construction.
- Revising property valuations every three years to align with market rates.
- Introducing tax exemptions on transaction taxes for low-cost housing, government plots, and first-time homebuyers.
Short-Term Measures to Revitalize the Real Estate Sector
To boost investor confidence and stimulate growth, the Task Force has proposed several short-term measures:
- Reducing policy rates to single digits to encourage real estate financing.
- Resuming the Mera Pakistan Mera Ghar (MPMG) scheme to restore developer and buyer confidence.
- Reintroducing mark-up subsidies on low-cost housing loans to make homeownership more accessible.
- Launching awareness campaigns and financial literacy programs to educate buyers.
- Collaborating with developers to introduce mortgage financing options with fixed terms of 5, 10, and 20 years.
Why These Reforms Matter for Pakistan’s Housing Sector
The real estate and construction industry is a cornerstone of Pakistan’s economy, contributing significantly to employment and financial stability. However, challenges such as rising taxation, inconsistent policies, and limited financing options have stifled investment and slowed property transactions.
- Real estate transactions have dropped by over 50% due to increased taxes.
- High transaction costs are driving investors to seek opportunities in foreign markets.
- Developers face financial hurdles, leading to delays in housing projects.
These reforms aim to create a transparent and stable property market, attract local and foreign investors, and provide affordable housing solutions for the public.
Conclusion: A Game-Changer for Pakistan’s Real Estate Market
PM Shehbaz’s approval of this reform package marks a pivotal moment for Pakistan’s housing sector. If implemented effectively, the proposed tax reforms and financing initiatives are expected to:
- Increase investment in the real estate market.
- Boost homeownership rates across the country.
- Revive the housing and construction industry, driving economic growth.
The successful execution of these reforms will depend on the collaboration of the National Tax Council and provincial authorities. Further updates will be provided as the process unfolds.
