Commercial Property: Conversion Fees to Be Reduced

August 14, 2012 / Russell Legato, Residential Property Analyst

The city district government in Lahore announced a reduction in commercial property: conversion fees. The amount will be 10 to 20 percent for any property with a value up to Rs10m. This conversion fee is charged against owners of private residential property who are using that property for commercial purposes.

Commercial Property: Conversion Fees to Be Reduced

Lahore’s city district government plans to lower the commercialization fees on any property worth less than Rs10 million. They are doing so to raise overall tax revenue. In the past, the city government charged a flat rate of 20 percent to convert a residence to a property for commercial use. Physical remodeling is not necessarily involved in order to facilitate the commercial use.

The changes will be as follows: A reduced fee of five percent when total value of residence is lower than Rs1 million. For properties worth more than Rs1 million, but less than Rs10 million, it will be charged at the rate of 10 percent.

The notification has not been received as of today. However, orders are impending and the city official expects to be notified soon. The amount officials want to collect for commercialization fees in 2012-2023 is Rs300 million, which is higher than amounts received in past years.

Although higher targeted amounts were set for previous years, the full amounts were never collected. Now the Executive District Officer, Masood Tamanna, announced that a revision was needed in that targeted amount. He says that if the fee was more reasonably priced, more people would pay it rather than not coming forward.

Those people who have deliberately avoided paying the fee will now be tracked down and forced to pay. Notices were served on those people residing in the towns of Ravi and Data Gunj Bakhsh who were using their homes for commercial purposes. They said that the commercialization fee was unaffordable. In a few months they will all be tracked down, put in a database and be required to make the payments.

The commercial property: conversion fees will be collected once this information is in place.

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