Bangladesh’s government has recently lowered property registration fees, which has become a blessing for the real estate industry. Property buyers can benefit greatly from this decision and more customers will be interested in investing in apartments. If you have decided to purchase a flat in Bangladesh, you must consider the registration cost as well. The cost is a substantial portion of your whole budget for a flat and you must prepare your budget plan according to the additional costs.
There is a lot of mental stress and unneeded financial obligations associated with real estate investing, which makes the process extremely scary and stressful. You should know the regulations and plan exactly when purchasing a property because there are many unknowns and legal barriers involved. So, you should be extra careful before taking the final decision as there are registration and tax fees involved with your purchase of property from any real estate companies. Not accounting for the additional costs of flat registration is one of the most common mistakes.
It is quite easy to calculate flat registration costs as most of the information is available online. This article will help you to calculate the cost without any hassle.
Checklist
How to Calculate Flat Registration Costs?
The Ministry of Law, Justice and Parliamentary Affairs issued a circular in July 2020, which stated that the total registration cost of lands or flats is reduced from 14% to 10% of the total price of that flat or land. For instance, a land or flat costing 1 Crore BDT will be charged 10 Lakh BDT as the registration cost, which includes stamp duty, registration fee, VAT, and local government tax. Previously, property buyers had to pay 14 Lakh BDT.
Source: Daily Observer
The cost reduction in the Bangladeshi real estate industry has indeed been a game-changer, fostering a surge in property investments. With the burden of high registration costs alleviated, more prospective buyers are now eager to invest in flats. This shift in preference allows them to allocate a more significant portion of their budget towards the type of flats that best suit their preferences and needs. As a result, the real estate market has experienced a boost, with a broader range of properties becoming accessible to a wider demographic. This transformation has injected newfound vigor into real estate investing, turning it into a more enticing and accessible prospect for many in Bangladesh.
If you have decided to purchase a flat, all you need to do is figure out 10% of the total price of your flat. You can follow the following formula to figure out your flat registration cost.
Registration Cost = Cost of your flat * 0.1
For example, if your flat costs 70 Lakh BDT, then the registration cost of your flat will be:
Registration Cost = 70,00,000 * 0.1 = 7,00,000 Lakh BDT.
List of Other Fees and Taxes Required for Buying Property
This list will present you with some other additional charges that you might have to pay. However, some costs are already included in the total registration cost of your flat. Additionally, some costs might also vary depending on the price range of your new property.
Down Payment
If you want then instead of paying the whole amount of the flat, you can opt for a down payment. Usually, the amount is 20% – 25% of the total cost of the flat. There are no taxes imposed on this amount.
Permission Fees
You will need official documentation proving approval from those in charge before you can legally acquire any property. RAJUK and the Ministry of Housing and Public Works in Bangladesh issue these permits and certifications.
The price may range from 300 BDT to 500 BDT. However, some 3rd party companies offer such services. They might charge an additional charge for their services.
Application Fees
You are required to pay this fee when you are eligible for applying for a loan from the bank and you take it. If you need a loan, avoid getting taken advantage of by scammers by doing your homework, and choose a lender with the finest policies and customer service.
Costs associated with applying for a loan often range from 1% to 2% of the total loan amount.
VAT
Depending on the size and cost of the property, a different amount of value-added tax (VAT) may be due. The rate is 2% of the deed value for apartments with floor plans of less than 1600 square feet. Comparatively, apartments larger than 1600 square feet charge 4.5%.
When it comes to buying land, however, VAT is not applied unless a developer or real estate business is engaged. The fee in such a situation averages around 3%.
Extra Loan Fees
An additional loan fee is the interest rate that is added to the price of the property or home. It might range from 5% to 6% of the purchase price of a house.
Appraisal Fees
If you hire a firm or an agent to find out if there are flaws in the property, you will have to pay an appraisal cost. In the course of making a purchase, this is not required. It is an optional step.
Notarization Fees
You might need to notarize some of your documents to avoid any legal complications. You can take this service from local notarization service providers. They usually charge 30 – 50 BDT per page, depending on your area.
Insurance Costs
Even though it is an optional step, it is recommended to purchase insurance for your property to safeguard your investments. You can contact your real estate agent or you can directly contact insurance agencies to purchase it.
Conclusion
You should be careful while handling additional costs and registration of flats in Bangladesh. If you are taking help from 3rd party companies to prepare documents and pay such fees, be sure to verify the costs yourself, as many companies try to scam customers. You can also calculate the amount of registration cost of your flat by following this article’s instructions.
Frequently Asked Questions
Does Bangladesh’s government charge property tax?
Ans: Yes. Your property falls under taxation from the government of Bangladesh.
What is the registration cost percentage of flats in Bangladesh?
Ans: The registration cost is 10% of the total cost of your property.
Can I pay the registration cost by myself?
Ans: Yes! You can pay the registration cost directly to the concerned office by yourself.
