Pakistan government mulls PKR 10 million ceiling on property investments for non-filers

The Pakistan Ministry of Housing and Works has proposed a new policy to the government, which would allow non-filers to invest up to PKR 10 million ($36,000) in the real estate and construction sectors without disclosing their sources of income.

This move is part of a broader set of proposals aimed at reviving the construction sector and real estate market.

The task force established by the government has prepared several recommendations, including the exemption of purchases up to PKR 10 million from asset investigation for non-filers.

According to sources, non-filers will be able to buy houses, plots, or flats up to the proposed value and will be able to sell and buy properties within the same financial limit.

Additionally, inherited properties and cattle will not be considered black money for non-filers. Non-filers can also use gold, valuable watches, prize bonds, and stock shares to invest in properties up to PKR 10 million.

The task force's document, received by Nukta, includes recommendations such as reducing federal transaction taxes, abolishing the 3% Federal Excise Duty, reducing stamp duty to 2%, and shifting non-resident verification to an online system via NADRA.

The proposals also include a reduction in policy rate to single digits, reintroduction of markup subsidies for low-cost housing, launch of awareness campaigns and financial literacy programs, collaboration with real estate developers to offer mortgage financing options, and implementation of fixed-term loans for periods like 5, 10, and 20 years.

Task Force Recommendations

Urban planning recommendations include online and time-bound approvals for building and housing schemes, policies for vertical growth through tax incentives, green building initiatives, and solarization, relaxation of building control regulations to facilitate vertical development, and establishment of high-density zones for residential buildings.

Further growth framework recommendations include digitization of approval processes, definition of affordable housing for targeted implementation, private sector participation through PPP and joint venture modes, and permission to acquire 20% unacquired area in planned housing schemes for low-cost housing provision.

Medium and long-term recommendations (6 months to 2 years) include the abolition of Section 7E of the Income Tax Ordinance, standardization of stamp tax rates across provinces and ICT, abolition of CVT in Islamabad, waiver of wealth reconciliation for investments up to PKR 50 million, property valuations revised every three years, and exemptions for transaction tax for specific categories.

For access to finance, the proposals include strengthening foreclosure laws, development of digital mortgage platforms with blockchain-based solutions, support for PMRC and collaboration with banks for subsidized credit facilities.

Moreover, encouragement for fintech companies to create innovative mortgage financing solutions, implementation of green mortgages and takaful-based housing insurance products, expansion of the role of MFIs in housing finance, and launch of mortgage bonds for easy access to finance is also proposed.

Urban planning and RERA proposals include development of master plans for major cities, introduction of urban regeneration policies, establishment of high-density zones, promotion of transit-oriented development (TOD).

Strict enforcement to prevent irregular and illegal housing developments, revision of zoning laws to promote vertical and high-density housing, and establishment of RERA and provincial RERAs is also recommended.

Growth Framework

Growth framework recommendations include development of a National Housing Policy, legislation of urban regeneration with pilot projects in Karachi and Islamabad, resumption of the MPMG Scheme, use of modular construction and green building materials, enhancement of community engagement in housing development, and policy continuity through parliamentary approval.

The government aims to finalize these measures by next month to ensure a robust revival of the construction and real estate sectors, sources said.