FAQs on Pakistan Real Estate, Landlord and Tenant Laws

What does the Pakistan Real Estate, Landlord and Tenant Law Actually Consist Of? The answer to this question is neither simple, nor easy to understand given the complex terminologies you will have to face, if you do not own land in a modern housing society or the Federal Capital.The article below is aimed at helping our clients understand how the Pakistan Real Estate, Landlord and Tenant Laws actually work! If you have a legal query , please get in touch via +92-300-5075993

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On paper at least, Pakistan’s Real Estate Landlord and Tenant law should be one of the most straightforward but anyone will know that as far as the law is concerned, nothing is what is seems from the outset. Here is a brief guide to this law for both landlords, tenants and property owners.

The Pakistani Real, Estate Landlord & Tenant Law has a firm basis aimed towards both fair play and justice. While it may seem initially to favor the tenant this simply isn’t the case as you will see further on. In terms of rent restrictions there are 4 main laws which deal with this and who cover the areas of Islamabad Capital Territory, The Punjab, Sindh, Baluchistan and the NWFP or North West Frontier Province.

Landlords and Tenants Are Free to Negotiate Their Own Rents!

Yes, this is true, in the Islamabad Capital Territory at least! Landlords and tenants are entitled by law to agree on the rent between them. Once they have done this they must register this rental agreement with the local controller of rents within 7 days of them signing it. The current law states that rent increases are imposed automatically after every 3 years of tenancy and the increase will be 25% of what the tenant is already paying. This rule only doesn’t apply if the tenant and the landlord have already agreed their own increase and have a written agreement stating this.

There are 5 other areas in Pakistan which are covered by a singular provincial legislation;

• The Punjab
• Cantonment areas
• Sindh
• Baluchistan
• NWFP

In these areas the rent controller has the power, after receiving an application from the tenant or the landlord, to set a fair rent. When it comes to deciding on what is a fair rent, there are several factors which are taken into consideration;

• The current rent of that building or of a similar building in the immediate locality at either that time or during the year previous to the application being made
• The current cost of repairs, construction and taxes
• The buildings rental value as per the Property Tax Assessment Register of the Taxation Department. The assessment list of the Cantonment Board is used for those properties in designated Cantonment areas.

In the Cantonment areas, as well as in NWFP, The Punjab and Baluchistan, should the affixed fair rent exceed the rent that the tenant is already paying as of the date the application was filed, the maximum the rent can increase by is 25%.When a fixed, fair rent is in place in Sindh, there can be no increase in rent for at least 3 years an even then no rent increase can exceed 10% of the current rent the tenant is paying.

If the amount of the rental charge has already been agreed between, and is down in writing, the landlord and the tenant, in the Islamabad Capital Territory and in the Cantonment areas no further increases are allowed if the length of the tenancy is for duration not exceeding 3 years. An exception to this is where additional alterations or improvements have taken place that either the landlord has paid for or the tenant has requested. Any rent increase cannot, however, exceed fixed fair rents that are being paid on comparable rented land or buildings in that location, and it cannot be charged under all the alterations and/or improvements are fully completed.

The Rights of Landlords and Tenants in Pakistan Relating to Contract Duration and Evictions

No tenancy is valid in Islamabad beyond the period of time that a landlord and his tenant have agreed on during the time preceding or following the date on which the tenancy actually began. If there was no fixed period, the tenancy is not valid after 6 months of the tenant receiving, in writing, a termination from the landlord.

There are several reasons why, in NWFP, the Punjab, Islamabad Capital Territory and Baluchistan, tenancies can be ended including;

• The death of the landlord

• If the landlord is now the widow or one of the children of the diseased landlord

• When the landlord has retired

• When the landlord is in salaried employment and is will soon be retiring

• When the landlord has began a period of leave, or is preparing to take leave, that will result in retirement

• Other reasons for a tenancy being ended include;

• The agreed rent not being paid within 15 days of that agreed date

• Should there be no agreed date tenancies can be ended if no rent has been received within 60 days from the last payment that was made

There is a proviso for this in the Punjab and in Baluchistan where by if the landlord makes an application on the aforementioned grounds but the default only amounts to one agreed monthly rent payment. If the tenant, at the first hearing, admits that he is liable for the payment of the rent owing the controller will, as long as he’s satisfied the tenant hasn’t defaulted previously, direct that tenant to pay in full the rent he owes by, a the latest, a date that doesn’t exceed 15 days from that date, and upon the receipt of the rent he’ll make the order rejecting that the tenancy be ended. Should the deposit not be made by the assigned date he will then make the order for the landlord to repossess his property and there will be no more proceedings.

There are certain things that the tenant is not allowed to do without landlords written permission that can also bring about the ending of a tenancy. There is a very long list of these and it includes the following;

• When the tenant has transferred his rights covered in the lease and/ or sublet any portion of the rented land and/or building,

• When the tenant has been using any part of the building and/or the rented land for any purposes other than those that it was leased for,

• When the tenant has infringed any of his tenancy conditions which the rented land or building that the landlord holds

• When the tenant has participated in the kind of acts that will likely cause impairment to either the material value of the rented land or building or its utility,

• When the tenant has taken part in such activities that will cause nuisance to neighbors

• When the building is located anywhere but a hill station and the tenant’s stopped occupying the property for a continuous period of at least 4 months without giving any kind of reasonable cause (this doesn’t apply in Islamabad).

• The rented land or property is reasonably needed by the landlord in order for him to carry out reconstruction or to erect a building as long as the landlord is in possession of the necessary sanctions for the aforementioned construction or reconstruction to go ahead

• The controller will usually afford the tenant a reasonable time span in which to hand the rented land or property back to the landlord and while he may extend this time span at his discretion it will not exceed 4 months from the date the decision was made, or 3 months if in Islamabad

The rules are a bit different when it comes to ending a tenancy in Sindh. The following can all be bone fide reasons for a tenancy being ended;

• The landlord is either a widow or an orphaned minor

• Retired or an employee in a salaried job who will be retiring in the next 6 months

• The landlord is aged 60 or is having his 60^th birthday within the ensuing 6 months

• The landlord can give his tenant/s written notice that he needs to take over the property for his own personal usage and needs them to vacate the premises by the date stated in that notice which cannot be less that 2 months from which date he receives the notice

This provision doesn’t apply however if;

The landlord was already aged 60 or had already retired before he leased out his property or has become an orphan or a widow or if he is residing in another property he owns in any area.

Applications can also be sent to the rent controller to end the tenancy if;

• The tenant fails to pay the rent for the premises he is living or working in within 15 days after the mutually agreed time frame has expired. If, however, there is no agreement in place, the tenant defaults by not paying the rent within 60 days after it was due. However, if this is the sole reason for the landlord making the application for the tenancy to be ended, and at the hearing the tenant admits full liability for non-payment the controller has to then, if totally satisfied that this tenant has never defaulted in this way before and the period of the default doesn’t exceed 6 months, order the tenant to remit the full amount of the rent he owes on of before a date set for this purpose and once this payment is receives the application will be rejected.

• Without the landlords written permission, the tenant has given the land or premises to a third party,

• Used these premises for purposes other than what they leased them for,

• Infringed on the conditions laid out in the tenancy agreement

• The tenant took part in the kind of acts that could very well cause impairment to the utility or material value of the property

• The tenant has been causing a nuisance to neighbors due to his or her activities

• The landlord requires possession of the premises in order to carry out reconstruction work or to erect a new construction on that site and has obtained the necessary sanctions for this work to be carried out from the authorities with the power to sanction. This carries the proviso that should the landlord not demolish that building within 6 months of taking over the possession or have started erecting the new building within 2 years of that stated date the tenant is entitled to regain possession of that property.

• When the tenant has been evicted in order for the landlord to construct a new building he could, before the new one is completed and occupied by somebody else, make an application to the controller for the order that directs him to be given possession of an area of the new build that doesn’t exceed the size he occupied in the old one. The controller will usually grant such an order for the tenant to take over the same sized space or a smaller one after considering the tenants needs as well as the type of this new build and its location. He can also decide on the amount of rent and the date it must be paid on the basis of the current rent on similar properties in the locale

• If the landlord wants, in good faith, the premises to be occupied by himself or to use as occupation for either his wife or any or all of his children.

• The situations differ again when it comes to the Cantonment areas and notices in writing is typically given in the following circumstances;

• When the landlord’s deceased

• When the landlord is either a salaried employee, is a retiree or is due to retire in the next 6 months

Any landlord who is seeking to evict his or her tenant/s must send an application to the controller asking for an order to be made and the controller could, after giving the said tenant/s a reasonable opportunity to object to the appeal make such an order that directs the tenant to hand over possession of the property. The criteria needed to satisfy this includes;

• The tenant hasn’t paid or tendered any rent to the landlord within 15 days from the fixed date or time frame that is stated within the tenancy agreement for the payment of rent

• If no such agreement exists this must be done within 60 days of that date on which the rent was due or an application can be made

If the tenant, without getting the prior, written consent from their landlord has;

• Transferred their rights or sublet the premises or any are thereof
• Used any part of the building for a purpose or purposes other than those for which they leased it

• The tenant has taken part in, or committed, acts that carry the likelihood of materially impairing the appearance, value or utility of that building

• The conduct or acts of the tenant have caused a nuisance to neighboring occupants

• If the building is located in any situation than a hill station, the tenant has left the building and hasn’t been there for a continual period of 4 months without any reasonable cause

• The landlord intends to demolish that building to make way for the construction of a new one on the same site and is already in possession of the necessary sanctions from the Cantonment Board to undertake such construction

The Controller may well allow the tenant a reasonable time frame for handing over the property to the landlord and while he may extend this it will not exceed 3 months. The landlord can also submit an application to the controller asking for an eviction order if he, in good faith, needs the premises for either his own occupation or that of the members of this family.

When a specified length of time has been agreed for a tenancy between a landlord and his tenant/s the landlord cannot use the grounds above for applying for an eviction and it must run its course.

Deposits or Bonds

Security and rental deposits, or bonds, are legal in every area and province of Pakistan.

Legislation

The main legal instrument is the 1973 constitution of 1973 which establishes the relationship that exists between the federation and the other 4 provinces. The legislative powers are thus shared between the federation and these provinces by use of the legislative lists. Within the Constitution we find both the Federal Legislative List and the Concurrent Legislative List. The matters covered by the Concurrent List are are covered by both provincial and federal legislation. Those matters which aren’t included in either list are classed as being within the provinces exclusive domain. No provincial statute, however, can be drafted that conflicts with any federal statute. Specifically, the Concurrent List deals with not only property related matters but other civil claims that are classed as existing within the scope of provincial legislation.

Rent Restrictions

There are currently 4 chief laws that deal with rent restrictions within Pakistan and these are as follows;

1. For the federal capital; The Islamabad Rent Restriction Ordinance 2001
2. For the 3 provinces as named; The Punjab/NWFP/Baluchistan Rent Restriction Ordinance 1959
3. For the province of Sindh; The Sindh Rented Premises Ordinance
4. For the Cantonment areas; The Cantonments Rent Restriction Act 1963 regulates all tenancies within these areas that have been designated as Cantonments by the federal government via a notification published within the official gazette and covers all those areas where members of the Pakistan armed forces have their quarters, where there’s a defense installation, where defense production units are situated or which are areas that are in the vicinity of any of the above and are required for use by the forces

Whilst these provisions are for, in the most part anyway, very similar there are still certain, and crucial, differences.

Evictions for the non-payment of rent

• The duration of the process up until completion; 60 days
• The duration of the trial; up to 60 days
• The duration of the enforcement period; 245 days
• Total days in which a tenant must be evicted by; 365
  

Pakistani Courts and the Lex Mundi Project; Just how effective is the legal system in Pakistan?

In general, the legal system in relation to matters involving rent is very effective, albeit rather slow. The rights of all parties are strictly enforce whilst the rules are applied and interpreted pretty consistently.

Any rental agreement that is executed on an annual basis, or on a term that exceeds 1 year or which reserves an annual rent must be registered under the Registration Act 1908, section 17. Failure to register these agreements tenders them to be null and void.

A brief overview of the landlord and tenant law in Pakistan as it now stands

There is no new legislation, or amendments to the existing one, that have taken place recently in regards to the landlord and tenant law, nor are any expected on the near future. Neither has there been any major changes in this area relating to de-regulating or re-regulating.

Whilst his law may seem to be on the side of the tenant, and even with the preambles for the various legislature stating that;

“it is expedient in the public interest to restrict the increase of rent of certain premises within (the specified) limits and the eviction of tenants there from,” the courts have long held that these laws aren’t confined to the objects of the preamble, ie; in the restriction of rent increases and tenants being evicted, and in fact are focused on the protection and the regulation of both the tenants and the landlords interests.

Frequently Asked Questions Relating to Pakistan’s Landlord and Tenant Law

Q; Can you tell me what Aks-Shaijra is?

A: Aks-Shaijra is the image of any specific area or land or specific khasra number from a map or plan of any estate or village for the purpose of defining its boundaries

What does the term Fard Malkiat? Fard Malkiat is also known as the Record of Rights/ Jama Bandi/Misal Haquiat/ Register Haqdaran-e-Zameen) and is maintained for the determination/record of the various types of rights pertaining to immovable properties

What is Mutation or Intiqal? Mutation is essentially a document that contains an order made by a revenue officer who must, at least, be an Assistant Collector at grade III, which makes note of any entry in the record of rights that is to be changed, mutated or altered in the revenue record.

What does Tattima Registry mean ? Tattima simply means “supplementary” and thus the Tattima Registry means a supplementary sale deed within a specified area.

What does Khasra mean?A Khasra is merely a piece of land with both specific measurements and (a) specific number.

What is meant by Khasra Garrdwari?

The Kharsa Gardwari is a register that is maintained for the record of possession and/or cultivation.

What is meant by a Survey?

A drawing or or a map that displays the precise legal boundaries of a property, easements, the location/s of improvements, encroachments, rights of way, and of the property’s other physical features.

Is a mutation a title document?

No it isn’t.

What’s the document called that creates title on an immovable property?

The document that creates the title on an immovable property is known as the Register Sale Deed or Registry /Baye-Nama.

What is a Sale or Conveyance Deed?

A sale or conveyance deed is the official document used to transfer the title of a property to the buyer from the seller. This deed helps buyers to ascertain as to whether the property they are buying in on land that belong to any builder, development society or authority.

Q: Where do I get the title deeds/house documents from for my property?

A: Your title deeds or house documents can be easily obtained from the department/office which dealt with the conferring or transferring of the property.

Q: What are the laws that deal with Pakistani real estate?

A: Among the many laws that deal with Pakistani real estate are the;

• Transfer of Property Act, 1882
• Land Revenue Act, 1967
• Stamp Act 1899
• Registration Act 1908

Q: Are there any specific precaution I should be taking before I buy any real estate or property in Pakistan?

A: As with any country you should fully investigate any property you are thinking of buying in Pakistan, particularly when it comes to the title deeds which tell you that the seller actually has the right to sell that property. In this regard, it is usual to do your homework into both the seller and the previous owner/s, if there are any. You need to obtain the original document that is in favor of the person selling it, a fresh ‘fard’, the aks-shajra and the certificate of non-encumbrance or no-objection. Should the vendor be selling property as the owner’s attorney you need to make sure that this power of attorney has been properly registered with the appropriate sub-registrar. Anyone found to be in possession of a fake or forged power of attorney cannot transfer any valid title deeds of any immovable property to another person.

Q: If the property I’m looking at registered in the name of a company should I investigate this further?

A: Before buying any property that is registered in the name of a company you ned to verify that the property isn’t mortgaged and isn’t standing as security for any kind of loan as if it is it cannot be considered to be freehold property. This is done by contacting the Securities & Exchange Commission of Pakistan, in particular the Registrar of Companies. You should also check the memorandum of association to ensure that whoever has been authorized to act on the company’s behalf in regards to selling the land, building etc has been verified. The last thing you shoud do in inspect the original title document/s which the company selling the property will be in possession of.

Can any corporate bodies make use of residential properties by turning them into office space?

It’s illegal in Pakistan to use any residential property for commercial use. Those industries which are service based, however, are entitled to operate to put residential properties to commercial use. However, service-based industries are allowed to operate in a residential area.

Q; Does Pakistani law allow foreigners to buy land or property in the country?

A: Foreigners are indeed allowed to buy Pakistani property once they have completed the legal formalities

Q: Does Pakistan have any inheritance laws?

A: There are inheritance laws in the country but these are very much dependent on religion. For example, Muslims have their own personal laws which cover inheritance, as do the other religions present in Pakistan.

Q: Do you need to register the transfer of all immovable properties in Pakistan?

A: A sales deed must be registered for the transfer of any immovable property valued at Rs 100/- or more.

Q: I’m a Pakistani living overseas, can I buy a property without visiting the country?

A:Pakistanis living overseas are indeed allowed to buy property in the country without coming to the country.

Q: What documents do I need in order to legally have ownership of a house?

A: The documents needed include the official deed, such as a sales deed, that verify the transfer into your ownership, a sales certificate or an allotment letter. .

Q: How do become the owner of a house in Pakistan?

A: There are several ways in which you can become the owner of a Pakistani property. You can buy it from from a private builder or person, you can gain the property by allotment or you can purchase it from one of the public authorities such as any of the following development authorities; MDA, FDA, CDA, LDA etc. Another way is by becoming a member of any of the co-operative housing societies.

Q: What actually is a power of attorney?

A: If a seller authorizes a third party or agent to sell a property on their behalf they are giving them the power of attorney. It doesn’t stop at house sales, property purchases, maintenance, etc either as power of attorney can be given by one person to another for a host of situations such as court appearances and tribunal. The most common is known as the general power of attorney, and this has to be registered, but when the power is handed over to deal with a particular act that pertains to just one transaction it’s called the special power of attorney.

Q: Can a person who holds the power of attorney transfer that property into his or her name?

A: That person who holds the power of attorney cannot transfer any property in their name as they have a fiduciary duty that they will be acting in your best interests and effectively do for you what you would be doing for yourself if you could. Any third party will presume that this person is acting as your representative and deal with them as they would with you.

Q: Can my power of attorney be revoked?

A: Yes it can.

Q: Under what circumstances would any Power of Attorney get canceled?

A: A power of attorney is automatically canceled if the executor dies or if he decides to cancel it.

Q: Does my power of attorney carry on after my death?

A: No, as all power of attorney’s end when you die.

Q: I’m looking at purchasing an apartment that is still being built, what paperwork should I be checking?

A: First off you need to check the approved plans for the building as well as how many floors it will have and make sure that the plans for the floor you are purchasing have been approved. You should also check that the land which the builder is constructing the building on has an agreement in place with the landlord, therefore, check who owns the land. Also have a look at any applicable by laws that exist in that location, thus ensuring that this building isn’t violating any regulations in terms of height, front or side setbacks etc. Also investigate the specs that are in the sales agreement are the same as in the sales brochure to ensure you are buying what you think you are. Should the builder be one of the companies that are part of the Securities and Exchange Commission of Pakistan you will be able to make sure that the company has the authority to sell real estate.

Q: Can I sell an immovable property while it’s still mortgaged?

A: No immovable properties are allowed to be sold while still mortgaged.

Q: Are there any important documents I should check out before purchasing a property?

A: There certainly are. The approved layout and building plans are a must, as are the current ownership documents and make sure that you examine all the deeds, check on all previous loans and encumbrances and ascertain the number of the survey. If it’s applicable you can request that the seller obtains the sanction, permission and no-objection certificates from the various authorities along with bills, tax receipts, accurate measurement of the land etc etc.

Q: What actually is stamp duty? And is it the buyer or the seller that is liable to pay it?

A: Stamp duty’s a tax or fee that is government levied on the transfer of any property and has to be paid on time and in full. Once stamped this paper becomes a legal and official document. It is the buyer who’s liable to pay stamp duty unless any commitments to the contrary are in existence.

Q: How easy is to get an approved building plan/s and is it necessary?

A: Raising a construction before you have had the building plans approved from the correct authority is a violation of those rules laid down by the relevant building control authority can ultimately lead to the construction being demolished, irrespective of how much has been constructed. For all purposes, and not just practicality, approval must be obtained before a single brick is laid.

Q: Who maintains the Pakistan land record?

A: Land records in Pakistan are maintained by the respective district administration and revenue departments who decide both the ownership and the boundaries of all property and land.

Q: I own a share of a property, am I able to sell that property?

A: You are allowed to sell your share of the property but no more and if there are no specific boundaries in place these must be agreed in advance with your other co-owners.

Q: Are sales deeds that are drafted by Nawees/Wasiqa/Arzi Nawees reliable?

A: No they are not. Only a lawyer who possesses the knowledge in all the respective laws can draft a sales deed which deals with the transfer of ownership of a property.

Q: What essential components make up a gift?

A: There are 3 essential components; the offer made by the owner/donor, the acceptance of the gift by the other party and the actual delivery of the gift.

Q: Can you revoke a gift?

A: Most definitely. Gifts can be revoked with the exception of those that have been made in the favor of somebody who falls into a certain category, ie someone with whom no contact can be made.

Q: What distinguishes a gift from those items bequeathed in a will?

A:Gifts can be made at any time and have immediate effect whereas those items in a will only come into effect once the maker of the will has deceased. Another distinguishing feature is how a property owner is entitled to gift his entire estate during his lifetime but then can’t make a will stating that the aforementioned estate goes to another legal heir after his death. He or she is able to make a will covering a third of their holdings in favor of anyone who isn’t a legal heir and if this favors one legal heir the consent/agreement is needed from any other legal heirs.