Pakistan’s real estate market is one of the pallbearers of the economy as it is the second-highest employment generator in the country after agriculture. The sector is deeply interlinked to over 50+ allied sectors.
Historically, this market has been casually claimed to be highly inefficient due to the fraudulent and unfair practices as it operates in the informal economy and is plagued with numerous issues owing to the absence of an effective regulatory framework that could protect the interests of all stakeholders — buyers, sellers, developers, builders, tenants, etc.
The lack of regulations often draws the stakeholders into long court battles over property frauds and ownership or tenancy disputes, repels potential investors because of unclear land titles and undermines public confidence in real estate.
In a bid to boost investments in the real estate sector, the incumbent government has taken a concrete step by introducing much-awaited Real Estate Regulatory Authority Act (RERA) to streamline, harmonise and modernize obsolete tedious processes and laws related to land and property development by making it mandatory for builders, developers and real estate agents to enroll so that it can swiftly find a remedy to consumers and tenants problems by protecting their rights.
What is RERA?
RERA is a Real Estate Regulatory Authority which has been established to regulate and promote real estate sector by protecting the interest of buyers in the real estate sector, by ensuring that the sale and purchase of plot, apartment or building, or sale of real estate project, to the buyer by a developer or owner holding title by himself or through a company or an agent is by an efficient and transparent manner.
It will regulate mega projects in the real estate sector and provide a mechanism for speedy dispute redress by establishing an Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority.
Some Key features of the RERA ACT are:
- Prior Registration of real estate project with real Estate Regulatory Authority
No developer shall advertise, market, or offer for sale, or invite persons to purchase any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area without registering the real estate project with the RERA as per the Act.
- Registration of the Developer with the Authority
Every developer shall make an application to the Authority for registration of the real estate project in such manner within a stipulated time and accompanied by certain fee as may be specified by the regulations made by the Authority.
- Functions and duties of developer
The developer shall create his webpage on the website of the Authority and enter all details of the proposed project for public viewing to ensure transparency.
- Rights and duties of allottees
The act secures the rights of buyers as they are obliged and entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the authority and empowered by law as per the information provided in the Act or the rules and regulations made under agreement for sale signed with the developer.
The buyer would be familiar and will be updated with the stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the developer and the allottee in accordance with the terms and conditions of the agreement for sale.
- Punishment for non-registration by a Developer
The penalties varies for developers and allottees while one of the penalty involves that if any developer is working without having valid registration with the Authority or when his registration has been revoked by the Authority his such working shall be considered an offence punishable with a penalty which may extend up to ten per cent of the estimated cost of the real estate project as determined by the Authority and the authority may sentence such developer to six months imprisonment.
- Establishment of the Real Estate Appellate Tribunal
All cases regarding real estate sector pending in any court of law, shall be transferred to the Appellate Tribunal which is designated to hear appeals and shall be heard from the stage such appeal is transferred.
Moreover, if any developer, real estate agent or allottee fails to comply with, or contravenes any of the orders, decisions or directions of the Appellate Tribunal, then he shall be punishable with imprisonment for a specific assigned time period depending upon the decision of tribunal.
It has representation from the ministries of interior and finance, National Housing Authority, Naya Pakistan Housing Authority including an additional secretary-level officer from the ministry of law and justice.
Perks of RERA Act
- No promoter will be able to sell or purchase any plot or publish an advertisement
- It can revoke the licence of the promoter in case of any violation
- look after the rights of the allottees and real estate agents
- It promotes investment in the sector
- Appellate tribunal will not remain fall under the ambit of civil courts
RERA is envisaged to usher in more transparency in the real estate industry as it contains the bandwidth to look into the details of registrations and complaints of the buyers and will turn out to be a sigh of relief for the consumers by eliminating the hassle of approaching the Courts for their disputes.
With improved buyer sentiment, we will see a positive impact on the fence sitters who will now come out and invest, further increasing the demand for more dynamic layouts considering the new normal.
This monumental move will surely transform the real estate sector of Pakistan as Prime Minister Imran Khan’s directive for the creation of the proposed authority has reinforced hopes that the government is serious about regulating the informal real estate market in order to realise its true potential and boost economic growth. Hopefully forging ahead, the market will only witness positive movement on the back of RERA.