Real estate in Bhutan is highly informal market, public has lost trust in brokers charging exorbitant fees and is blamed for sky rocketing property prices and yet such brokers thrive. Why?
Because of us the buyers & sellers. We are to blame. We want to save on or evade 3% property ownership transfer tax. So we make two copies of sales deed. One to submit to local authority with fake pricing (>=PAVA rate) and one with real pricing.
Once you do it, it provides safe haven to ‘these’ brokers. The one submitted to the authority with fake price is now the legal doc. Your weakest point to tax evasion become their strongest point to hike price. Our greed kills us.
E g. Your ask price per deci is 5 Lakhs on 10 deci land. The broker charge 5.50 lakhs, a 50k/deci top up. But you reflect PAVA rate (2 lakhs) on sales deed submitted to authority. You save on tax by Nu.90k. But end up paying Nu.165k to the broker.
So why evade tax and pay more than that to brokers to evade tax and help increase property price?
Furthermore, in the event of transaction and payment dispute, you cannot show the real sales deed. Fake one that is submitted shall be interpreted. You will also be charged for forgery of doc, evasion of tax, unethical practices and other charges.
So how can we make buying and selling transparent and safe and prevent sky rocketing property pricing?
1. Make only one sales deed
2. Pay tax in full and in actual
3. Choose a broker who charges standard price not a top up.
4. Follow safe payment modality such as housing.bt escrow payments (TM)
5. Best way is to sell and buy directly without any brokers while pay a standard legal and escrow fees
Other suggestive government .intervention.
1. Govt must standardize brokering (marketing & sales) with certification just like Cadastral Land Suryevor and Certified Conveyance (legal and Lag Thram transfer)
2. Introduce Capital Gains Tax
About housing.bt:
housing.bt is Bhutan’s first real estate marketplace to buy, sell and rent properties. Its primary objective is to bring together buyers and sellers and facilitate professional real estate services in collaboration with key partners such as real estate developers, banks, certified brokers, and certified conveyance and surveyors in Bhutan.
We offer free and premium listing services. But we do not charge any brokerage commission percentage. To learn more about our services click here.
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- Don’t want to sell through brokers? Here’s an alternative; The Rise of Real Estate Marketplace
- Why the expansion of the welfare regime has not solved the growing housing affordability crisis in Bhutan
Earn by writing Bhutan real estate investment blogs now. Contact info@housinng.bt for content writing.