Contrary to the policies of the federal government
to make the Housing and Construction industry as the engine for
economic growth, which have started producing positive results, the
incompatible decisions taken at the provincial and district level seem
to mar the entire efforts, especially in Sindh.
It was due to government's encouraging decisions
and incentives to this sector besides a much needed relief to the HBFC
borrowers supported by the entire banking system which has opened its
doors with innovative house financing products which are no doubt
giving a booming effect to the Housing and Construction industry in
The banking system both in the public and the
private sector has come at a massive scale to boost the highly
important sector of Housing and the Construction in Pakistan.
National Bank of Pakistan (NBP) has introduced a
product to facilitate financing for low cost housing scheme namely
"SAIBAN" especially for the federal, provincial and city
government employees at an affordable price.
The NBP in collaboration with Association of
Builders and Development (ABAD) the representative body of builders
and developers in Pakistan has jointly taken the above step on the
desire of the Federal Finance Minister Shaukat Aziz for uplifting the
construction and housing industry and to provide shelter to the
According to Aamir Siddiqui, Executive Vice
President NBP, the Saiban scheme was specially tailored for low-income
employees of the Federal and the Provincial governments and City
District government. This step will not only create immediate
employment opportunities on massive scale, but will also enhance
economic activities in a large number of industries like cement, iron
and steel glass, paints, wooden work, marble and ceramic tiles,
sanitary industry, electrical accessories and a large number of
related industrial units.
As majority of the employees are receiving low
salaries less than ten thousand rupees per month and national bank has
pledged to target such low paid employees. According to an estimate,
there are more than 4 million such employees all over the country,
which make a sizeable market for the low cost housing schemes.
Similarly, PICIC in the private sector has launched
housing finance scheme "Apnay Ghar Ka Khawab" for this
project, PICIC has earmarked a fund of rupees one billion for a period
of 6 months of the current year. PICIC has already disbursed over one
billion rupees under its housing finance scheme since April 2003.
Similarly, almost all the commercial banks have
introduced their own house financing products for segments of the
society which speaks the all out efforts of the federal government to
mobilize the financial sector to lend a big hand to make the housing
and construction industry a great success to achieve the desired
Karachi, which always has been a haven for
investment in the real estate sector, has responded exceptionally as
the transaction in the real estate had taken a tremendous jump, which
reflects the pace of growth in over 80 industries allied to the
housing and construction sector.
Unfortunately, the pace of growth has been stalled
before it takes off by the decision of the Sindh government making it
mandatory for the consumers to obtain a No Objection Certification (NOC)
from the Karachi Building Control Authority. The condition of
obtaining NOC has been imposed across the board, whether it's a new or
old project, irrespective a developer or any individual develops it,
whether it's a constructed house or flat or an open plot. The NOC
would obviously issued to those who have completed all relevant or
irrelevant formalities, thus opening the doors of corruption in this
sector. This requires completion certificate of a house or project,
utilization of land fee whether this plot is lying in the far-flung
areas where no development has been made by the responsible
authorities. Another step taken at the city government level
especially in Gulshan-e-Iqbal and Gulistan-e-Jauhar areas to pay 1.2
percent tax on any transaction, the sale or transfers of an open plot
or constructed house. All these steps at the provincial and district
level have severally affected the pace of growth in this sector and
almost the booming activity has come to a standstill.
On the other hand, the federal government had made
additional measures to improve the profitability of investment in the
housing and construction sector. These include elimination of excise
duty on paints, reduction in the duties on a number of building
materials, including steel, cutback in the duty on imported machinery
together with exemption from sales tax and withholding income tax.
To remove uncertainties of legal titles from the
real estate markets, all records of building authorities and societies
would be computerized and public disclosure would be made of the
ownership of properties so that consumers could enter into real estate
transaction without fear of misrepresentation and fraud. In
contradiction to the spirit of the policies of the federal government
irritants at the provincial level are feared to destroy the entire
efforts to generate economic activity in the housing and construction
The provincial government has enforced the
condition of the NOC following a court decision in respect of
violation of building rules in the construction of a housing project
exceeding the number of flats to the approved plan by a developer.
Though the decision was came obviously with a good intention to save
the customers from possible frauds, uncertainty and hardships while
entering into a property deal. However, the Revenue Board of Sindh
perhaps without taking into account the future complexities in real
estate transaction had imposed the NOC condition across the board in
all categories of the real estate transactions, transfers causing a
crash like situation in the housing and construction sector. According
to informed more than 6 petitions have already been submitted to the
court for withdrawal of the mandatory condition of obtaining NOC for
prior to registration of any property deal.
The Sindh Board of Revenue has issued a
notification to all sub-registrars asking them not to executive any
sale or lease deed (except agricultural land) without ensuring that
the parties concerned have obtained NOC from the Karachi Building
Control Authority (KBCA).
The notification says that the Sindh High Court
while hearing C.P Nos.310/2004 and 311/2004 had directed that all
sub-registrars be ordered not to executive any sale deed or lease
(except for agricultural land) without the required NOC from KBCA.
It is, however, learnt that the sub-registrars
deputed in cantonment areas were executing lease, sale deed, mutation,
power of attorney and gift deeds without ensuring whether the people
seeking such documents had obtained the NOC from the KBCA that had
been made mandatory in the wake of the BOR's circular.
For issuing NOC, the KBCA has designed NOC form
bearing details of plot and property as well as carrying the
photograph of the owner. The form is available for Rs100 at the KBCA
Any applicant seeking the NOC for lease, sub-lease,
power of attorney and sale deed, transfer can get the same in at least
three days for which he will have to pay Rs200. To get NOC in 24
hours, those having a property up to 200sq yards or a 600sq feet flat
would have to pay Rs500. Similarly, those having property above 200sq
yards or flat measuring more than 600ft flat would have to pay Rs500
and above that size will cost Rs1000 for getting the NOC.
People who had brought flats in the buildings,
which had been raised, in violation of approved plans will not be
issued NOC required for getting lease, sale deed, mutation or power of
The owners of such flats were seen strongly
protesting over the new rules and said that in fact the violations in
raising flats or other buildings cannot be carried out without
connivance of the KBCA officials, hence they should be penalized or
punished and not the innocent buyers. It is true that whenever the
construction work starts even at a small plot not only the KBCA, or
former KDA, and a host of other agencies including policemen reach
their asking for papers and if they found paper correct they ask for
Mithai (sweet) for start of a new building. There were hundreds of
such flat apartments where the builders obviously in connivance of the
relevant departments and their corrupt staff had committed gross
violation of building rules.
There are a number of housing projects where
contrary to the approved plan shops were constructed and sold out
where were the relevant authorities while all these illegal activity
was going on, said an affected consumer.
Instead of making things more complicated by
levying taxes, levies and bad laws which there are certain areas which
need immediate attention of the government for rules and regulations.
Among such areas where strong regulations are
required include the business real estate or property brokers. The
estate agencies or property agents have erupted all over the country
in an epidemic form. These real estate brokers are found in every
street and corner. Since there is no legal or financial requirement
for initiating a real estate business every Tom and Harry becomes a
real estate agent overnight without having knowledge about the
property rules, transfers, registration or other procedures. Since
most of such brokers are ignorant about the legal requirements, how
these people could save the consumers or the buyers or the sellers of
the property from being cheated by unscrupulous elements who are out
to defraud people of their hard earned money.
In the developed world, no one can become a real
estate broker unless he gone through a diploma in real estate
brokerage, registered his entity as a estate broker with the
government, have a certain amount of fund in his bank account and pay
the tax on his earnings through real estate business.
Contrary to the highly desirable situation of the
developed countries, it looks like a free for all situations in
Pakistan where they are operating without fear or any rules and
regulations or any legal consequences in case of any fraud in the
transaction of the property.
The brokers are charging a fee at the rate of 2
percent from both the parties without paying any money to the
government exchequer. Why the authorities have neglected these highly
sensitive areas. In fact these are the areas which need a close watch
through rules and regulations instead of creating hurdles by asking
NOCs or other bureaucratic hurdles in the growth of highly labor
oriented sector of the economy.
There is a large breed of real estate agents
operating all over the country with out any registration, approval or
other requirements needed for carry on the sensitive real estate
I personally know the background of a tragic story
where one of the brokers managed to win the confidence of a government
school teacher to deprive him the hard earned pension, provident fund
and gratuity on the pretext of selling a cheaper house on false
documents in North Karachi.
In that particular case the victim was convinced to
get early retirement and buy the house because the said school teacher
could build a house from the salary which was even not suffice to
cater to the family with essential and basic needs. Consequently, he
lost his job, all the money and the house as the genuine owners of the
house approached the court for recovery of their house, which sold, by
such a broker on false documents.
The incentives announced in the budget include 5
percent reduction on import of specified machinery not manufactured
locally to encourage investment in the Housing and Construction
Paints and varnishes and other essential items in
this sector. It is proposed to abolish 10 percent central excise duty
on paints and varnishes. The facility of tax credit was provided
through Finance Act 2001 to any profit paid to a schedule bank or NBFC
for housing scheme regulated by the SECP, on a loan or advance by
government or the local authority, where such loan is utilized for the
construction of a house.
This facility is not available to private sector
employees who obtain loan for the same purpose from their employers.
It is proposed to extend this facility to employees of statutory
bodies and public limited companies listed on stock exchange as well.
The government intends to create at least one million new jobs mainly
through generating economic activity in the Housing and Construction