The Real Estate and Housing Association of Bangladesh on Sunday warned that the housing sector could face a major setback from July 1 if the proposed 15 per cent tax on flats received by landowners under joint development agreements took effect, citing risks to investment, housing affordability and urban development.
The concerns were raised by REHAB president Ali Afzal and senior vice-president Abdur Razzaque in a statement on the proposed fiscal measure in the budget for financial year 2026-27 getting implemented from July 1.
Abdur Razzaque said that the housing sector was passing through a period when policy stability and investor confidence were crucial, but the proposed tax had created significant uncertainty on the market.
He said that landowners and developers typically enter into projects with long-term plans spanning three to five years, adding that imposing a new tax burden during the implementation stage could fundamentally alter the financial calculations of ongoing projects.
He questioned who would bear the tax burden, as landowners received no cash in exchange for their flats and existing agreements did not account for such a levy.
He warned that disputes over tax liabilities could delay flat handovers and create administrative and legal complications regarding property valuation and tax assessment.
Razzaque also expressed concern that the tax could discourage landowners from participating in redevelopment projects, particularly the reconstruction of old and risky buildings in areas such as Old Dhaka, Dhanmondi and Mohammadpur.
He suggested several alternatives, including imposing tax when flats were sold rather than when they were transferred, providing exemptions for owner-occupied units and allowing instalment-based tax payments.
Ali Afzal said that the proposed levy contradicts the widely accepted principle that taxes should be imposed on realised income rather than unrealised assets.
He argued that landowners receiving flats under development agreements did not obtain any cash income and therefore should not be subjected to immediate taxation on those assets.
Afzal said that the housing sector already bore a substantial tax burden through registration fees, capital gains tax, value-added tax, income tax, utility connection charges and various regulatory fees.
He claimed that the proposed measure would eventually increase apartment prices, as developers would pass on the additional costs to buyers.
He urged the government to reconsider the proposal, arguing that any short-term revenue gains could be outweighed by reduced investment, slower urban development and broader economic losses.
