The Zambia Institute of Estate Agents has described as progressive the changes announced by Finance Minister Alexander Chikwanda in the 2016b budget address.
Institute President Dr. Saul Kiwempindi said Mr. Chikwanda should be commended for addressing key issues that were likely retard progress in the real estate sector.
‘For some years ZIEA has been proposing and resisting any increment of taxes in real estate sector for reasons of allowing the sector to grow and attract more investments both local and foreign,’ Dr Kiwempindi said.
He said one of the other reasons fostered by the Institute is to discourage non-closure of property transactions by tax payers.
‘ZIEA contended that increase of Property Transfer Tax (PTT) will encourage non-disclosure of property transactions and make the government loose the much needed revenue,’ he said.
Dr Kiwempindi who is also CEO of New Horizon Properties said the Institute is excited that government has decreased PTT from 10% to 5% and is confident the sector is going to see positive movements in terms investments and increased revenue due to more disclosures.
‘We are expecting more local participation in terms of property development both in the residential and commercial sectors though foreign direct investment (FDI) will depend on the stabilization of the global economy. Most importantly, we should expect more FDI with the stabilization of the Kwacha which has been affected adversely by the slowdown of both Chinese and European economies who are the consumers of our major foreign income earner.’
Dr Kiwempindi also commended government’s response to proposals regarding Withholding Tax obligations.
‘It is a positive step that government will be focusing on the rental income earner rather than the tenant. It is expected that more revenue will be collected with this approach by making the landlords more accountable rather than the tenants.’
He said the Institute has no doubt that the government has good intentions for Zambians to participate the real estate sector and expects that more Zambians will be encouraged to invest in the property development business.
‘However, the participation of Zambians in the real estate development will depend on how financial institutions and government will deal with the issue of high interest rates that have hindered local participation.’
He added, ‘Another key factor that is going boost the property sector is the consistent investment in the road network which has opened up new areas of property development for residential, commercial and industrial development. The continued investment in public infrastructure such as schools and hospitals is another key factor that is going to propel the sectorial growth.’
Dr Kiwempindi cautioned, ‘We need to look at the 2016 budget in its totality and analyze the different components and sectors in order to understand the aggregate effects of the measures that have been taken therein.’
‘It is not the 0.3% out of the 0.9% allocated to housing and social amenities that will grow the real estate sector but rather the drivers of real estate development such road network, tax incentives, provision of water and sanitation facilities and many others that will attract investment in the sector.’
He added, ‘In my analysis a number of these key drivers have been taken care of and there is no doubt that the sector will achieve positive growth. The pro-infrastructure development budget of 2016 the realization of significant growth in the next 2 to 3 years.’