The wish to buy a plot in Pakistan tempts many people because our property sector holds a lot of ‘ever on the rise’ growth potential. In the past, investors only looking to score short-term gains, unfortunately, largely determined the sector’s trajectory. Their hasty practices inflated property rates dangerously. This concern left many serious buyers – particularly those in genuine need of buying a plot – reeling on the sidelines.
The last decade, however, saw things improving for Pakistani real estate. Increasingly favourable government policies, coupled with buyers’ inclination to see the sector as a lucrative avenue for secure investments, ushered in the proverbial ‘winds of change’.
Due to the recent slump seen in the property market, real estate value in many parts of the country has declined. This makes now the perfect time for you to make your first property purchase.
In Pakistan, we currently face a shortage of over 1 million houses, and this gap is widening by the day. With the right approach in place, however, a bright future for the country’s real estate sector is virtually guaranteed. In this respect, the current government does seem to be checking all the right boxes – particularly in terms of policy proposals and enforcement.
This guide walks you through the details on buying a plot in Pakistan for the first time. Here, you will get the full details on:
- The preliminary requirements (for securing a piece of land) –
- Sifting through the right options for buying a plot in Pakistan
- Checking NOC and related approvals
- Focusing on the small details to steer clear of property frauds
- Inquiring about the deadlines (and other specific details)
- Confirming prevalent market rates
- Settling the estate agent’s commission
- Transferring property ownership in Pakistan
- Applying for an NDC
- Finalising a Property Purchase Agreement
- Working out the mode of payment
- Paying the taxes due
- Making payment(s) for the plot
- Paying agents’ commission
- Collecting the Allotment Letter
The preliminary requirements
This part pertains to researching and verifying certain claims. Additionally, following the advice given below will help you to avoid experiencing the common variety of property frauds.
Sifting through the Plot Options on Offer
Opting for a low-priced unit often figures as the first priority of genuine buyers. This practice, however, can be deadly, as lower price tags can tend to lower their further sales potential. It can also out buyers at a risk for property fraud.
Therefore, we highly recommend that you pick projects owned by reputable developers. Furthermore, you should always pay the site a visit – before putting your money on the line. As a further check, read our guide on what kinds of plots you shouldn’t go for.
Property experts recommend buyers to purchase property when the market is down. And to a large degree, this really is one of the best property investment tips for people wishing to capitalise on Pakistani real estate.
Check NOC and related approvals
As of the time of writing this piece, the public authorities concerned are investigating a number of housing schemes to verify their approval status. These include several residential projects awaiting approvals from development authorities and utility service providers. So our advice for whenever you are faced with the prospect of investing in such schemes: avoid making any purchases for the time being.
Specifically, the Lahore Development Authority (LDA) cautions buyers against the project marketing gimmicks and expensively cut brochures of these projects. The authority, in fact, explicitly insists that buyers verify the complete details of their society’s approval status.
As a further safeguard, you should always reach out to the Revenue Department’s office to verify the status of land owned by the project developer you’re interested in working with. Needless to say, any verbal securities, in the absence of definitive tangibles (project approval documents), should also be guarded against.
Lastly, do confirm if the developer has approvals for gas, water, electricity, and sewerage connections.
Consult the LDA checklist to learn more property investment tips geared towards helping you make secure investments.
Focus on the small details (the ‘fine print’) to steer clear of property frauds
These days, most housing scheme brochures are largely dominated by a medley of high-resolution project pictures. Additionally, they devote some space to the facilities on offer. When you visit the site, do check if the society actually has these claimed provisions in place – on the ground.
If the society is in its development phase, the amenities promised may not be available yet – which is ok. But in such cases, you need to verify if the developer has plots reserved for these facilities. If not, mark the situation as a red flag, and conduct further inquiries.
Going forward, do check if the payment plan shared with you includes all the charges that you are required to pay. It should necessarily include mention of the development charges, membership fee, registration charges, processing fee, and possession charges.
If your payment plan falls short of these particulars, demand these details in writing.
Obtain a signed document from the developer which explicitly states that the communicated payment plan is inclusive of all the charges mentioned. This certificate forms a vital part of the property purchase agreement in Pakistan.
Inquire about deadlines and specific details
If a society is in development phase, inquire about the timeframe developer has in mind to deliver it. You should also have in writing an estimate on the time requires to handover its possession.
If the developer has applied for NOC for provision of utility service, ask for proof. You must also demand for the list of plots mortgaged with the concerned authority. Most of all, be sure that the plot you buy isn’t mortgaged or located in area marked for amenity plots.
You should also confirm if no investigations are going against the developer.
Concerned authorities are keen to introduce transparent practices in the property sector. This marks for a bright future of real estate business in Pakistan.
Confirm market rates
Based on the individual society plan, property price can vary from one project to another. So this may work well in the case you pick a plot in some developed project. If yes, you must inquire about the prevailing market rates.
For this purpose, get in touch with a couple of property agents. You can enquire about market rate of a similar or same plot from various source. Please note, there is always a room to bring asking rate down by 10% to 15%. Therefore, negotiate on it.
The margin to negotiate on rates increases when market lacks active buyers. Consider these factors before making the final offer.
Settle the estate agent’s commission
Commission of real estate agents in normally 1% of the property value. If one agent is involved, he is bound to get 1% commission from both the buyer and seller. In certain situations, the agent can also settle for a different amount. Some agents work on 2% while other are also looking to bring their commission percentage lower than 1%.
Depending on buyer’s negotiation skills, property agent can bring his commission down. In any case, the details must be settled with the agent beforehand. Bear in mind, buyer is not supposed to make any payments to the agent other than the commission.
How to transfer property ownership in Pakistan
This part gives you specific step-by-step details on how to transfer property.
Assuming that you have finalised the plot by carrying out due diligence. This plot is located in a developed housing scheme and belongs to an individual. When purchased directly from the developer, the society allots property, not transfers it.
The details shared here under apply once buyer and sellers have communicated on the deal. This can be a direct communication or via an estate agent.
Both parties decide on a time to visit the society’s office to apply for No-Demand Certificate (NDC).
Apply for an NDC
The NDC is proof that the property seller doesn’t default any dues or taxes. Issuance of these certificates is the first step in property transfer procedure.
For obtaining this certificate, both the buyer and seller visit the society office. The seller presents his allotment letter to the transfer officer . To place an official request for issuance of NDC, the seller fills in a form. The form is to submitted along:
- An attested photocopy of the allotment letter
- Photocopies of buyer’s CNIC
- Photocopies of seller’s CNIC
This often takes two days. Societies also charge for issuance of this certificate as processing fee. The seller is bound to pay this fee. The charges vary from one society to another. The charges also differ according to the plot size.
In case the buyer needs these certificates on an urgent basis, he will pay double of the fee. In such a scenario, the certificate is issued on the same day.
The concerned officer confirms if the property seller owns the said property. Besides, it also confirms if the seller has any dues to clear. These could include the following:
- Pending property taxes
- Utility bills
- Society fee
- Membership charges
- Development charges
- Possession charges
The certificate is issued only once the plot owner clear these dues. The seller gives this NDC to the buyer to proceed with the property transfer procedure.
Get a property purchase agreement
The property purchase agreement can take place the day NDC is issued. For this purpose, the buyer and seller submit an affidavit to straighten out facts.
1. Buyers’ affidavit
The buyer confirms that he hasn’t yet paid taxes due on the plot and agrees to pay these. He also agrees to make payment for any variation in development charges on demand of the society.
2. Sellers’ affidavit
In this document, the buyer confirms of his ownership of the said plot. He requests the society to cancel his plot allotment in favour of the buyer. The document includes details of the buyer.
3. The agreement to sell plot
This document is prepared on a judicial stamp paper.
The document follows a set pattern. It includes details of the buyer and seller, date of agreement. In addition, it also includes details on the settled price of the property. As well as a confirmation by the seller that the buyer has paid the committed amount.
Mode of payment
At this point, the buyer is to make payment for the plot. Also, he will be required to pay Stamp Duty at 5% of the property’s total price and membership fee.
Please note, some societies do not accept payment in cash or via check. They instead want a pay order or a bank draft. Please have these ready with you on the day of property transfer. The pay order has to be deposited in specific branches of chosen banks.
At this point, the process for transfer of plot starts.
Transfer of plot
The seller is required to follow the set procedure for transfer of plot. The process may vary from one society to another. The practices followed for document property agreement in Pakistan are similar. In most cases, the required documents for plot transfer include:
- Transfer application form
- Original allotment letter
- NDC
- Transfer affidavit and its two attested photocopies
- Affidavit by the buyer
- The Agreement to sell a plot
- Membership application form along with two passport sized photographs of buyer
- Attested photocopies of buyer’s and seller’s CNIC
- Attested photocopies of two witnesses
- Original document of statement issued by the account office on payment of dues
These documents are submitted in presence of both buyer and seller. At this point, the buyer receives briefing on issuance of allotment letter under special circumstances. Buyer is bound to pay fee for issuance of an allotment letter.
Pay the agent’s commission
Once the documents are submitted , both parties pay commission to agent. Agents follow through the process closely to ensure that their efforts get paid off. He will most definitely be present to guide you throughout the process. He will also keep you informed of the required documents beforehand. By all means, payment against his service is due by this time.
Collect allotment letter
Housing societies often take seven working days to issue the allotment letter. The buyer can receive it on an urgent basis by making extra payments. The extra charges also vary from one developer to another.
Once you receive your allotment letter, keep it somewhere safe. The process to re-issue lost documents is lethargic and, trust us, you don’t want to experience that.
Pro Tip: If you are looking for top areas to buy plots in provincial or federal capitals of Pakistan such as Karachi, Lahore, Islamabad, Quetta or Peshawar, head over to Zameen Area Guides.
So that’s how you go about buying your first plot in Pakistan. If you have feedback or queries on the article, let us know by leaving a comment below.
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