Muhammad Akram is a real estate advisor who has many clients. Although his office is located in Lahore’s Ravi Town he has brokered deals in almost every major locality of the city. This has been possible due to forming partnerships and a large pool of customers.

Akram has formed a relationship with Pakistani expatriates and their relatives because he thinks they are a source of regular income for him. Some expatriates have so much trust in him that they have given him the authority to do transactions on their behalf.

For years, he has made purchases when in his view property prices in an area were in take-off stages and has sold them off once they have attained maximum value.

Of late, Akram is unable to reach a decision. The prolonged lull in the real estate sector, confusion about the rates of different taxes, new property values worked out by the Federal Board of Revenue (FBR) and the newfound role of the board in the whole scenario are factors that make him follow a wait and see policy.

"I cannot make deals frequently anymore. If I do, it would lead to imposition of Capital Gains Tax (CGT) at a higher rate on property values, many times more than earlier set DC rates," he informs.

This, he thinks, "will create problems for expatriates who buy cheaper plots in the start but every year try to make a saving and upgrade their properties in their homeland. They sell the old ones and buy new ones as they ultimately have to return to the country and make their house here. But now they will not be able to sell that frequently," he says.

Akram fears his clients may shift their real estate investments to countries, such as Dubai and Malaysia, and panic selling can hit the sector if the situation remains the same.

The situation on the buying side is also not very clear. Prospective buyers are being asked to give undertakings that they would pay any outstanding dues and government taxes that remain unpaid at the moment.

Tariq Majid, a resident of Lahore Cantt, tells TNS that this condition is imposed because neither housing societies’ managements nor real estate advisors are clear about the exact taxes applicable on the deals. In many areas, he says, registrars are also confused, asking people to pay stamp duty according to property valuation notified by the FBR instead of DC rates.

Read also: Valuing property

Majid has no idea where to park his investment if it is not the real estate. Banks offer low interest rates and investing in the stock market is risky unless one remains fully involved and has knowledge of how it works. The real estate, on the other hand, is comparatively safe as demand for housing units, residential and commercial plots is always there.

"I have been advised by my real estate advisor to hold back my investment. He thinks the undeclared money will evaporate from the real estate market and it will open up for genuine buyers. If prices are bound to come down in this case then why shall I buy at inflated rates," he says.