To increase transparency in the property valuation sector of Pakistan, the Federal Board of Revenue (FBR) has brought property valuation rates closer to market values ever since it was authorised to revise valuation in the metropolitan cities of the country. The FBR has revised property valuation tables two times in the past, once in 2018, and in 2019.
The increase in the property prices led to an overwhelming increase in property rates in cities like Lahore and Islamabad where realtors observed a price increase of more than 600%. The move attracted severe criticism and backlash from several stakeholders and realtors who considered the upward revision as illogical and unreasonable. The upward revision of prices initiated in December 2021 forced the government to suspend the implementation until an understanding was reached with the various stakeholders.
The upward revision of the property valuation sector was taken to reduce uncertainty regarding property valuation in the real estate sector of Pakistan. After the revision of the tables, properties in Lahore and Islamabad are on the higher end of the spectrum creating an inflationary trend. However, the higher property valuation rate translates into higher property tax collection and the FBR has managed to collect PKR 20 billion additional revenue from transactions of properties in the last four months, and the annual revenue collection is expected to grow by 20-25%.
Documenting real estate transactions and their credible value is also a requirement from the global money-laundering watchdog FATF that placed Pakistan on the grey list in 2018. The revision in property rates is to reduce the chances of money laundering and tax evasion in the real estate sector of Pakistan.
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