Pakistan Institute of Development Economics

Discourse Vol 1, Issue 2
Build A Real Estate Market: Kill FBR And DC Rates
Publication Year : 2022

The government has done everything possible to ensure that the real estate market does not develop. And it continues to do so.

Why do we have a broken pricing system? Decades ago, unable to track prices District Collector (DC) announced a price that obviously was difficult to adjust as rapidly as a market move. When the static DC rate was outstripped by the market rate by a huge margin and become obsolete, the Federal Board of Revenue (FBR) jumps into announcing prices which it tries to adjust unsuccessfully. Both rates are different from the market rate at which transactions take place.

Why we persist with these prices at a time when Market rates are easy to reveal with some technology is astonishing, to say the least! With these rates, the government has clearly announced that all properties will be registered at the lower DC rate as it is a recognized government rate. It is the government-announced rate, and it is accepted for property transactions. Given taxes are charged at the registration rate why would you not register at the DC rate?

Therefore, the announcement of the DC rate or FBR rate readily develops “black market” flows.

Discourse Vol 1, Issue 2
Build A Real Estate Market: Kill FBR And DC Rates
Publication Year : 2022

The government has done everything possible to ensure that the real estate market does not develop. And it continues to do so.

Why do we have a broken pricing system? Decades ago, unable to track prices District Collector (DC) announced a price that obviously was difficult to adjust as rapidly as a market move. When the static DC rate was outstripped by the market rate by a huge margin and become obsolete, the Federal Board of Revenue (FBR) jumps into announcing prices which it tries to adjust unsuccessfully. Both rates are different from the market rate at which transactions take place.

Why we persist with these prices at a time when Market rates are easy to reveal with some technology is astonishing, to say the least! With these rates, the government has clearly announced that all properties will be registered at the lower DC rate as it is a recognized government rate. It is the government-announced rate, and it is accepted for property transactions. Given taxes are charged at the registration rate why would you not register at the DC rate?

Therefore, the announcement of the DC rate or FBR rate readily develops “black market” flows.