Hidden cost refers to some additional charges that are added to your cost of buying a land in BD. If you don't keep a clear idea about the hidden charges, those may surprise and disappoint you. In fact, people may take advantage of charging you more if you have no clear conception. That's why you must know The Hidden Cost when buying a Land in Bangladesh.
Hidden Cost when buying a Land in Bangladesh
This is the amount that is not included in the sticker price. The sectors where the hidden cost applies include the likes of government taxes & fees, unofficial payments, legal/documentation costs, utility connection fees, as well as future maintenance charges. Meanwhile, the government taxes and fees include stamp duty, registration fees based on mouza rates, Transfer Tax, VAT, etc.
Registration Fee
This fee is basically around 6-10% of the official deed value. The rate depends on the area, as it counts the mouza (government-assessed) value rather than the actual sale price of the specific land. This is one of the major extra costs that the buyers will have to pay to register the land with the government. Some sources mention that the registration fee for a land in BD is 1% of the property's market value.
Transfer Tax
If someone resells the land within the 3 years of his purchase, then he will have to pay an additional 6% transfer tax.
Stamp Duty
This works as a government fee as a document of validation. The stamp duty in BD for the land is 1.5% of the property's declared value.
VAT (Value Added Tax)
This varies based on the size of the property. In Bangladesh, the VAT added for a flat is basically 1 to 3% meanwhile the sum is almost negligible for the lands.
Local Government Taxes
This is a yearly property tax (Holding Tax) that depends on the assessed value. The charge is 3% in Union Parishads. Meanwhile, in City Corporations or Municipalities, it is 2% (for sale deeds).
Withholding Tax (Gain Tax)
In the recent budgets, there has been a reduction in this charge. The charge is 4% for Dhaka Ka-Gha categories, 2% elsewhere in the capital.
Mutation Fees (Namjari)
Following the registration, the buyer needs to register a mutation that will see the land being transferred to his name. It is also a government charge. However, if you have a broker or legal representative, then it will cost you even more fees. If the land you're purchasing has a dubious ownership history, it will not only cause delays but also cost you some extra money.
Measurement and Survey Fees
Boundary disputes are very common in our country. One will try to recheck whether his boundary is yielding him all the deserving land or not. You will get precision and legal transparency through a professional surveyor. But that will also cost you a significant amount of money.
Consultancy Fees
Verifying land ownership, checking legal documents, and drawing up contracts, etc, will require your assistance from the professional advisor. These sorts of tasks will also charge you some healthy payments.
Utility Connection Fees
In case your property is located in an emerging area, you will be required to have some additional processes to access utilities like electricity, water, gas, etc. Those utility connections will also cost you an extra penny.
Informal Payments
Sometimes processes like quick processing of the official documents, as well as registering at a lower mouza rate than the actual one, would require you to spend some extra money. Those are not ethically legal, though, and will be a sort of bribery.
