State Bank names firms to determine market value of properties

KARACHI: The State Bank of Pakistan (SBP) on Monday notified a list of property valuers who will be authorised to determine the market values of immoveable properties.    

The SBP list contained 59 valuers registered with the Securities and Exchange Commission of Pakistan (SECP). They are allowed to determine the value of up to Rs1.5 billion.

The fair market value will help the Federal Board of Revenue in generating suitable capital gains from the real estate business transactions. 

The central bank also invited fresh application from the aspiring valuers.

“The panel would continue to remain effective till the time Valuers Registration and Governance Regulations 2016 notified by the SECP through SRO 348(I)/2016 dated April 20, 2016 is enforced and appropriate amendment in laws has been made,” the SBP said in a notification.

The list of approved valuers is in compliance to the amendment into the Income Tax Ordinance, 2001 under which an Inland Revenue Commissioner has been authorised to reject property transaction value and ask assistance from the SBP approved valuers to determine the open market value of a property.

The SECP registers valuers in five different categories. A panel has a mandate to carry out valuation of agriculture, residential and commercial lands and residential and commercial structures and buildings. But, it can’t set price of industrial plants and infrastructural construction.

This panel consists of engineer, chartered accountant or a cost of management account and a practicing lawyer having experience in property documentation and ancillary matters.

Under the commission’s laws, the panels are allowed to provide valuation services to banks.

A banker said since tax laws related to fair market value has been amended the panel would work as valuers for the Federal Board of Revenue.

The valuers are already providing services of indentifying the open market values to banks, which extend credits against property as collateral.

Tax officials said the purpose of third party valuation through banking panels to ascertain the actual value of property is to eliminate unfair dealings. Presently, 75 percent of property transactions are understated and a huge quantum of black money is involved in this business.

Businessmen are against the third party valuation and said that it would open doors for corruption. They said this will eradicate the significance of provincial valuation tables on property prices. 

Provinces set prices as per the property size and location after the 18th amendment into the constitution.

The SBP’s valuation will be an attempt of the federal government to encroach upon the provincial rights.