First-Time Plot Buyers in Pakistan
The allure of purchasing a plot in Pakistan is enticing to many individuals due to the immense growth potential in our property sector, which seems to be constantly on the rise. Unfortunately, in the past, the sector’s trajectory was largely determined by investors seeking short-term gains, resulting in inflated property rates. This situation left genuine buyers, particularly those in urgent need, sidelined and concerned.
However, over the last decade, the Pakistani real estate market has witnessed improvements. Favorable government policies and buyers’ recognition of the sector as a profitable avenue for secure investments have brought about a “winds of change.”
Currently, there is a decline in real estate value in various parts of the country, presenting an ideal opportunity for first-time property buyers like you to make a purchase.
Pakistan is facing a shortage of over 1 million houses, and this gap continues to widen. Nevertheless, with the right approach, the future of the country’s real estate sector holds great promise. The current government appears to be addressing the necessary aspects, particularly in terms of policy proposals and enforcement.
This guide provides comprehensive details for first-time plot buyers in Pakistan. It covers:
- Preliminary requirements for securing a piece of land
- Evaluating the right plot-buying options in Pakistan
- Verifying NOC and related approvals
- Paying attention to the smallest details to avoid property frauds
- Inquiring about deadlines and specific details
- Confirming prevailing market rates
- Negotiating the estate agent's commission
- Transferring property ownership in Pakistan
- Applying for an NDC (No Demand Certificate)
- Finalizing a Property Purchase Agreement
- Determining the mode of payment
- Settling taxes due
- Making payment(s) for the plot
- Paying the agent's commission
- Collecting the Allotment Letter
1. Preliminary Requirements
This section focuses on conducting research and verifying claims. Following the advice provided here will help you avoid common property frauds.
2. Evaluating plot options on offer
While it may be tempting for genuine buyers to prioritize low-priced units, this practice can be risky. Lower price tags may hinder future sales potential and increase the risk of property fraud. We highly recommend selecting projects owned by reputable developers. Additionally, it is crucial to visit the site in person before making any financial commitments. To further ensure your safety, refer to our guide on plots to avoid. Property experts advise purchasing property when the market is down. This is one of the best property investment tips for those looking to capitalize on the Pakistani real estate market.
3. Verifying NOC and Related Approvals
At the time of writing, authorities are investigating several housing schemes to verify their approval status. Some residential projects are awaiting approvals from development authorities and utility service providers. Our advice is to refrain from making any purchases in such schemes for now.
The Lahore Development Authority (LDA) specifically cautions buyers against falling for project marketing tactics and glossy brochures. The authority insists that buyers thoroughly verify their society’s approval status.
To ensure further protection, always reach out to the Revenue Department’s office to verify the status of the land owned by the project developer you are interested in working with. Verbal assurances, in the absence of concrete evidence (project approval documents), should also be treated with caution.
Finally, confirm if the developer has obtained approvals for gas, water, electricity, and sewerage connections. Consult the LDA checklist for additional property investment tips to help you make secure investments.
4. Paying attention to the smallest details to avoid property frauds
To avoid falling victim to property frauds, it is crucial to pay attention to the small details, often found in the “fine print.” Nowadays, housing scheme brochures primarily feature high-resolution project pictures and some information about the facilities offered. However, when you visit the actual site, it is important to verify if the society has actually implemented the claimed provisions on the ground.
If the society is still in the development phase, it is understandable that the promised amenities may not be available yet. However, in such cases, it is necessary to verify if the developer has reserved plots for these facilities. If the developer has not made provisions for these promised amenities, consider it a red flag and conduct further inquiries.
Furthermore, carefully review the payment plan shared with you to ensure that it includes all the charges you are required to pay. The payment plan should explicitly mention the development charges, membership fee, registration charges, processing fee, and possession charges.
If the payment plan does not include these details, request them in writing. Obtain a signed document from the developer that explicitly states the communicated payment plan includes all the mentioned charges. This certificate is a crucial component of the property purchase agreement in Pakistan.
5. Inquiry about deadlines and specific details
If the society is still in the development phase, inquire about the developer’s estimated timeline for project completion and possession handover. Ask for proof if the developer has applied for the No Objection Certificate (NOC) for utility services. Additionally, demand the list of plots mortgaged with the relevant authority. Ensure that the plot you intend to buy is not mortgaged or located in an area designated for amenity plots. Also, confirm that no investigations are currently being conducted against the developer. Authorities are actively promoting transparent practices in the property sector, which bodes well for the future of real estate business in Pakistan.
6. Confirming prevailing market rates
Property prices can vary based on the specific society’s plan, so it is essential to inquire about the prevailing market rates.
Contact multiple property agents and gather information about the market rate for a similar or identical plot from various sources. Keep in mind that there is typically room to negotiate the asking price down by 10% to 15%. Therefore, engage in negotiations.
The margin for negotiating rates increases when the market lacks active buyers. Consider these factors before making your final offer.
7. Negotiating the estate agent's commission
Real estate agents usually charge a commission of 1% of the property value. If only one agent is involved, they receive a 1% commission from both the buyer and the seller. However, in certain situations, agents may agree to a different commission percentage. Some agents work on a 2% commission, while others may be willing to accept less than 1%.
Depending on the buyer’s negotiation skills, the property agent’s commission can be reduced. In any case, the details should be settled with the agent in advance. Remember, the buyer should not make any payments to the agent other than the commission.
8. Transferring property ownership in Pakistan
This section provides a step-by-step guide on transferring property ownership. Assuming you have completed the necessary due diligence and finalized the plot, which is located in a developed housing scheme and owned by an individual. If the plot was purchased directly from the developer, the society allots the property rather than transferring it. The following details apply once the buyer and seller have agreed on the deal, either through direct communication or via an estate agent. Both parties need to arrange a visit to the society’s office to apply for the No-Demand Certificate (NDC).
9. Applying for an NDC (No Demand Certificate)
The NDC serves as proof that the property seller has no outstanding dues or taxes. Obtaining this certificate is the first step in the property transfer process. To apply for the NDC, both the buyer and seller visit the society’s office. The seller presents their allotment letter to the transfer officer and fills out a form to officially request the NDC. The form must be submitted along with:
- Attested photocopy of the allotment letter
- Photocopies of the buyer's CNIC
- Photocopies of the seller's CNIC
The process typically takes two days, and societies charge a processing fee for issuing the certificate. The seller is responsible for paying this fee, which varies from one society to another and depends on the plot size. In urgent situations where the buyer requires the certificates immediately, they may need to pay double the fee. In such cases, the certificate is issued on the same day.
The concerned officer verifies if the property seller is the rightful owner and has cleared all dues, which may include pending property taxes, utility bills, society fees, membership charges, development charges, and possession charges. The NDC is issued only after the plot owner settles these dues. The seller then provides the NDC to the buyer to proceed with the property transfer procedure.
10. Finalizing a Property Purchase Agreement
The property purchase agreement can be finalized on the day the No-Demand Certificate (NDC) is issued. For this purpose, both the buyer and seller need to submit an affidavit to clarify certain facts.
- Buyer's affidavit: The buyer confirms that they have not yet paid the taxes due on the plot and agrees to make the necessary payments. They also agree to pay any variation in development charges as demanded by the society.
- Seller's affidavit: In this document, the seller confirms their ownership of the plot and requests the society to cancel their plot allotment in favor of the buyer. The document includes details of the buyer.
- Agreement to sell plot: This document is prepared on a judicial stamp paper. It includes details of the buyer and seller, the date of the agreement, and the settled price of the property. The seller also confirms that the buyer has paid the committed amount.
11. Mode of payment
At this stage, the buyer is required to make the payment for the plot. Additionally, they need to pay a Stamp Duty of 5% of the property’s total price and the membership fee.
Please note that some societies do not accept cash or check payments. They may require a pay order or bank draft. It is important to have these ready on the day of property transfer. The pay order should be deposited in specific branches of selected banks. With the payment completed, the process for transferring the plot begins.
12. Transfer of plot
The seller must follow the prescribed procedure for transferring the plot. While the process may vary between societies, the general practices for documenting property agreements in Pakistan are similar. The required documents for plot transfer typically include:
- Transfer application form
- Original allotment letter
- NDC
- Transfer affidavit and its two attested photocopies
- Affidavit by the buyer
- Agreement to sell a plot
- Membership application form with two passport-sized photographs of the buyer
- Attested photocopies of the buyer's and seller's CNIC
- Attested photocopies of two witnesses' CNIC
Original document of the statement issued by the account office confirming payment of dues
These documents are submitted in the presence of both the buyer and seller. At this point, the buyer receives information regarding the issuance of the allotment letter under special circumstances. The buyer is required to pay a fee for the issuance of the allotment letter.
13. Pay the agent's commission
Once the documents are submitted, both parties pay the commission to the agent. Agents closely monitor the process to ensure their efforts are rewarded. The agent will guide you throughout the process and inform you of the required documents in advance. Payment for their services is due at this time.
14. Collect allotment letter
Housing societies typically take seven working days to issue the allotment letter. The buyer can expedite the process by making additional payments. The extra charges for an urgent allotment letter vary between developers. Once you receive your allotment letter, keep it in a safe place. The process of reissuing lost documents is time-consuming, and it is best to avoid such complications.
