Delay in uniform policy for govt depts hampers construction activities

ISLAMABAD: Prime Minister Imran Khan’s ambitious construction package, containing incentives to boost up economic activity, has hit snags in Punjab because of delay in issuance of a uniform policy by the provincial government for private housing schemes located in the jurisdiction of official development authorities.

“Different development authorities, which regulate the housing schemes, have different bylaws,” an official told The News, and stressed that uniformity of bylaws was necessitated. He said the government had decided to put in place a uniform policy for the private housing schemes to be followed by the development authorities but its issuance was facing delay.

The prime minister’s construction package became effective from April 17, 2020 and will last till Dec 31, 2020. The relevant ordinance says a construction or development project, which commenced between April 17, 2020 and Dec 31, 2020 and completed before 30th September 2020 is covered by package.

The revised Punjab Private Housing Schemes and Land Sub-Division Rules 2020 to be implemented by the development authorities have not so far been issued with the builders and development authorities awaiting them. The delay in adoption of the uniform policy by the development authorities is a major discouraging factor for the builders, which will result in reduction of tax collection, an industry official said.

A Punjab government official said a decision had been taken to implement the Private Housing Schemes and Land Sub-Division Rules 2020 of the Lahore Development Authority (LDA), which had been revised and improved, on all other development authorities including Rawalpindi Development Authority (RDA), Faisalabad Development Authority (FDA), Gujranwala Development Authority (GDA), Multan Development Authority (MDA) etc., to achieve uniformity throughout Punjab.

He said letters were being written to the RDA, FDA, DGA and MDA to seek their consent and input to adoption of the LDA bylaws by them to ensure uniformity. Official record shows that early this year, the development authorities wrote letters to the Housing, Urban Development & Public Health Engineering (HUD&PHE) Department secretary of Punjab giving their consent to the adoption of the LDA rules on private housing schemes.

However, later the LDA rules were somewhat amended after the approval of the cabinet. The HUD&PHE is sending the amended LDA policy for the private housing schemes to all the development authorities seeking their consent in black and white for its adoption. Approval of the cabinet would be got for issuance of the notification of the uniform policy only after the authorities would communicate their consent to the LDA rules.

The industry source said that the approved LDA rules, which the government has decided to be adopted by all other development authorities, encapsulate positives clauses for the private housing schemes.

For instance, the rules have increased the commercial area of housing societies by 5%, making it 10% in total. They have permitted the buildings to be “mix commercial”, meaning a multi-storey residential plaza is allowed to have one floor for commercial purposes.

The industry official said that another good rule provides for revision in the plan of an approved housing scheme meaning that the sites earmarked for public amenities can be changed, but open spaces shall not be shifted to a different location in the revised layout plan, except if no plots have been sold in the scheme; or the sponsor has furnished no objection certificates from the buyers of sold plots facing the open space required to be changed after issuance of public notice specifying proposed changes.

However, he said a discouraging measure for the builders has also been introduced – the DC (district collector) rate has been enhanced up to 15 percent. At the time of registry of the land, the purchaser is required to pay a huge amount as duty as per the increased DC rate.

As a whole, the construction industry has hailed the package laden with incentives, concessions and facilities. It introduces the Fixed Tax Regime (FTR) on income and sales tax for the builders. No inquiries will be made by the government about the source of investment made in the real estate sector; sales tax on construction companies giving services to builders registered with the provincial revenue authority will be at zero tax basis, which was 16% previously; and holding period of immovable property and its rate of tax on capital gain, which came down from eight years to four years, has been reduced.