Government moves to facilitate real estate sector

It appears that the government has taken an interest in the real estate sector, with the aim of improving it. Several initiatives have been undertaken by the government towards this goal. For starters, the Government of Punjab has announced that it will be revising the stamp duty for transfer of immovable property, meant to streamline real estate transactions.

Rural Stamp Duty Reduction:
Previously, urban properties in Punjab were subjected to a stamp duty equal to 1% of the property’s value at the time of property transaction while rural properties were subjected to a stamp duty equal to 3% of the property’s value at the time of property transaction. The current change will harmonize the stamp duty for both rural and urban properties to 1%. The expected change will result in making property transfers across the province more manageable and may provide a boost to the real estate sector in the province.

Assignable Deed:
Furthermore, the Government of Punjab has also legalized the concept of the “assignable deed”. This is a new legal framework; whereby private parties can legally hold and trade property rights for a fixed duration i.e. 1 or 2 years. It only costs Rs. 1,200 to make this agreement on the government stamp paper. For a 1 year transfer, 1% stamp duty needs to be paid and for a 2 year transfer, a 2% stamp duty will be charged. This legally opens up new trade avenues, for instance, a party may legally assign a commercial property to another for a fixed duration (say 2 years) as part of a trade agreement. The new party can enjoy the revenues from the commercial property for 2 years legally.

Islamabad Stamp Duty reduction:
The Federal Government has also taken some steps in this direction. Previously, stamp duty in the Federal territory of Islamabad was 3% of the property’s value at the time of property transaction. However, on April 9, the Capital development Authority (CDA) reduced this to 1%. This will facilitate property transactions in Islamabad and may provide a further boost to the property sector in the country.