In the Global Real Estate Transparency Index (GRETI) 2018 report released in June last year, Pakistan came in at the 75th spot.
This was a significant improvement – by up to 15 positions – as the country moved up the ranks of the index’s ‘low transparency’ tier. The change was attributed to ‘regulatory reforms and increased data collection and publication by government bodies’ by the report’s authors.
Going just by this score, however, it soon becomes evident that the country still has a long way to go.
And this observation becomes particularly concerning when we look at the magnitude of the country’s real estate sector, its importance and impact in the lives of Pakistanis, and most importantly, the national perspective. As such, the sector’s vast contributions, in terms of its role in the economy and revenue-generation potential for the government, are undeniable.
The issues faced by the real estate sector
Currently, there are several issues facing the real estate sector that need serious resolving. These include the need to boost investor confidence in the field, secure investments, and steady the entire setup which may appear directionless at times.
For a long time, it has been observed that mostly every property dispute that should arise often takes years, and even decades, to remedy. This scenario effectively freezes people’s investment capitals; causing all-around losses.
One often-discussed, and much-anticipated, step towards a resolution of these issues has been the establishment of the Real Estate Regulatory Authority (RERA).
The Federal Board of Revenue (FBR) Directorate General of Immovable Property (DG IMP) was established recently to see to some of these problems. However, while some section of its core functions will overlap with those that are expected of RERA, the directorate is geared more towards widening the tax net and increasing the government’s revenue flows.
An authoritative body that is primed for the welfare, modernisation, and exclusive oversight of the real estate market is still needed. This is where RERA can truly play a decisive role.
What is expected of RERA?
In the past, different quarters within the real estate sector have periodically called for the establishment of a regulatory authority. In like fashion, several government authorities have also regularly announced their plans for setting up such a body – particular during the last decade.
And with all things considered, the demand for such an authority does not come without reason. The sector needs updated laws, more oversight, and a solid mechanism for the quick resolution of disputes. Any regulatory body will be expected to take stock and resolve all these issues.
Many of the functions that have been expected of, and attached with, RERA are listed as follows. The authority will:
- Have quasi-judicial power to resolve land disputes
- Advise the government on real estate matters
- Make recommendations to the government on updating laws relating to real estate
- Modernise laws relating to the transfer of property
- Improve the system of transfer of property both within and outside housing societies
- Introduce a new reformative structure, in collaboration with real estate stakeholders, to lower taxes while widening the tax net
- Introduce comprehensive laws to regulate the relations between consumers, investors, and housing societies/developers
- Register and license real estate agents, developers, and marketers
- Set uniform standards, practices, and regulations to ensure smooth working of the real estate sector
- Handle real estate-related consumer complaints
- Have powers to inspect, penalise, and enforce its decisions
Streamlining jurisdictions, raising revenues
Recently, the Competition Commission of Pakistan (CCP), in its report proposing the formation of RERA to the government, also recommended training and certifying brokers & agents. This move will help both property buyers and real estate brokers in a number of ways. And most importantly, it will make the workings of the sector more professional, and boost public confidence in it.
Presently, there are a number of conflicts that arise from the confused overlapping of the powers of local development authorities around the country. An overarching regulatory authority will be able to regulate these bodies, and resolve any complaints registered against them.
Overseas Pakistanis are an important asset for the economy of the country. Their remittance flows have for long offered an almost consistent source of relief for the cash-strapped treasury (faced with frequent balance of payment crises).
RERA, as an added function, will help to address any confidence issues and concerns faced by overseas Pakistanis. It will also assist the government in maintaining a set of consistent policies to counteract the vagaries of politics.
The march of time
The past few years have seen increased regulation and documentation activity in the real estate sector of the country. It can be reasonably expected that this trend will continue in the future too. This situation, understandably, may make property stakeholders at least temporarily apprehensive: such is the nature of the market. But with proper planning, it can turn into a boon for the economy.
The very next stage in the evolution of Pakistan’s real estate sector, no less.