| Islamabad: The Pakistan Institute of Development Economics (PIDE), a think tank within the Planning Commission, has underscored significant disparities in property valuation rates and proposed a solution that involves eliminating both the DC and FBR notified rates, replacing them with an auction market, according to news published on October 27.
Read: FTO urges systematic reforms in FBR’s property valuation nationwide
The prevailing market rate, which reflects the actual prices at which real estate transactions occur, is approximately 5 to 10 times higher than the DC rate and 2 to 4 times higher than the FBR rate.
The PIDE has recommended selling properties through an online portal, where anyone can purchase a property for a price that is 10% higher than the bid price listed on the portal.
To address the challenge of varying valuation rates, the proposal suggests establishing a proper real estate market. One potential solution involves implementing multiple listing services that enable property auctions. The managing authority of the online portal would issue a contract certificate, subject to the consensus of both parties and the submission of an advance payment. Property transfer would only proceed upon receipt of this certificate.
Presently, the real estate market operates with at least three different property valuation rates: the Federal Board of Revenue (FBR) immovable property valuation, the District Collector (DC) rate, and market rates. These multiple rates exist primarily for revenue purposes. While transactions occur at market rates, the recorded property prices are mainly determined by the government’s DC rate in alignment with government expectations.
Provincial governments use the DC rate to calculate stamp duty and Capital Value Tax (CVT). The Stamp Act (1899) Section 27-A mandates that duty on immovable property be assessed according to property value, using the DC notified value table/rate for property valuation. |
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