Budget lacks guidelines to boost real estate sector

Tax structure should be such that will help reduce prices of basic construction materials and to ensure affordable housing for general people, Real Estate and Housing Association of  Bangladesh (REHAB) President Alamgir Shamsul Alamin told The Business Post’s Rafikul Islam in an exclusive interview

How much is the proposed budget for FY23 housing sector friendly?

Finance Minister AHM Mustafa Kamal proposed a total of Tk678, 064 crore national budget for the 2022-23 fiscal year. But there is no proper guideline on the real estate sector of Bangladesh for its expansion. So, I think the proposed budget is not housing sector-friendly one.

How much do you think this budget will meet your expectation?

We unveiled several proposals before announcing the budget for FY23 but we don’t see any reflection of our demands in the proposed budget. Our expectation will be fulfilled if our demands are met in the proposed budget.

However, the government should provide proper policy support for the real estate sector’s development. Land and flat registration costs should come down. The government can provide a refinancing fund of Tk20, 000 crore for housing loan in the next budget.

What kind of changes do you want in tax structure to flourish the housing sector?

I think the proposed budget for the next fiscal year will impede the growth of the real estate sector as the new tax measures will increase the prices of raw materials. We want such a tax structure that will help reduce the prices of basic construction materials like rod, cement and stone.

Now developers are going through a difficult time due to increase in the cost of building construction materials amid high dollar rate.

The Finance Minister proposed raising value-added tax (VAT) on billets and rods by Tk200 per tonne at the retail level. As a result, the rod prices will further rise amid the global market volatility.

Our industry will further plunge into a bad situation if the tax structure is not relaxed. So, I will request the government to lower the tax on steel raw materials in the new budget.

You have recently said price of flat might rise by Tk1, 000 per square feet. Why?

Due to hike in the prices of construction materials, the cost of developers has gone up. So, the price of flat has increased by Tk1000 per square feet for the last three months. The price may further increase if the prices of construction materials cannot be controlled soon.

Why do you think an investment of Tk50, 000 crore may come from undisclosed money in Bangladesh while experts oppose its legality?

The government allowed undisclosed money holders to invest more in real estate sector without question in the budget for FY2020-21. A total of Tk20, 600 crore investment came from undisclosed money in the sector in the FY21. But, the investment came only Tk900 crore in the FY2021-22 due to withdrawal of the phrase ‘without question’.

However, I think that an investment of Tk50,000 crore will come by the next 2/3 years if the government allows the ‘undisclosed money’ not earned through corrupt means but somehow for various reasons – for not paying taxes and other reasons like that – those money holders cannot disclose them for investment. If done, the chance is there for them to invest that money in the real estate sector.

What sort of challenges do the realtors face while doing business in the country?

The real estate business has more challenges compared to others. Due to Covid-19 and Russia-Ukraine war, we have to face more challenges now. Some complaints like property purchasing from and handing over to clients rose from both ends - realtors and clients. However, our main challenge is to overcome all complications.

How can the government ensure affordable housing for low-income people through budgetary policy support?

Owning to higher commodity prices and expensive housing, general people are under a pressure including around 40 lakh people engaged in the real estate sector. Actually, we cannot achieve the Sustainable Development Goals (SDGs) leaving anyone behind especially those who are homeless. So, the government should consider our demands to provide affordable housing for all.