Given that it is being\nconsidered to give the construction sector an industry status, it is likely\nthat there will be taxation and other fiscal and non-fiscal benefits associated\nwith the decision. The main purpose, however, is to promote housing supply at\naffordable prices in order to meet the growing demand. <\/p>\n\n\n\n
One big impediment for classification\nof housing sector as an industry is its historically informal nature. There are\nshades of grey dominating this labor-intensive sector. This has to change to boost\nformal investment, including Foreign Direct Investment (FDI). <\/p>\n\n\n\n
There are deep rooted\nissues in land titles and approval processes which hinder formal development.\nThis keeps formal financing institutions at bay from lending to both builders\nand consumers. Nowhere in the world does housing finance flourish without\nformal financing and investment. <\/p>\n\n\n\n
Making a housing society\nin Pakistan is a pain for businesses as they attempt to operate in compliance\nwith rules and regulations. The inherent advantages are for those who have\naccess to opaque information systems, and for those who can politically and\nfinancially maneuver the regulatory departments and authorities. That is why\nventure capitalists\u2019 and private equity firms\u2019 interest in the housing sector\nhas remained limited. <\/p>\n\n\n\n
The housing society\nregulations system is fractured with loopholes that constrain the inflow of big\nwhite money. For example, in Lahore, there exists a masterplan and is being\nupdated frequently. But every developer has to go through a lengthy process in\norder to check the status of land. If the land is classified for agricultural\nuse, housing cannot be developed on it. The requirement to go through such long\napproval processes, despite having such classification on the masterplan, does\nnot make much sense. Similar is the case for land allocated for industrial use\nor for any other purpose. <\/p>\n\n\n\n
In addition, a planning\npermission is required to see if the\nland can be issued for housing development purpose or not. The builder does not\nnecessarily need to be the owner of the land to check its status. If it is not\nowned by the developer, the financial strength is assessed to gauge the ability\nof the developer to acquire land and develop a housing society on it.<\/p>\n\n\n\n
The planning process does\nnot end at this point. Numerous other approvals such as no objection\ncertificate (NOC) from revenues, WASA, and engineering department of LDA are\nrequired at this stage. For a developer having past experience and understanding\nof the system, it would take around a year to get the planning permission. Imagine\nthe amount of time it would take an amateur to get through the process. <\/p>\n\n\n\n
The absurdity is that\nanother round of approvals from respective departments is required. The problem\nwith this is not just the duplication of the process which takes up time to\ndilute the commercial viability, but also the avenues of fraud that open up\nduring the process. The approvals from various departments are demonstrated by\ndevelopers for selling plots. <\/p>\n\n\n\n
Since planning permission\ncan be acquired without even owning the land, shady developers, based on\napproval documents, start selling plots within un-acquired land. Buyers usually\ndo not know that fact and the risk is transferred to buyers as developers\u2019\nequity investment to the project remains limited. Once the developer recovers their\ninvestment from the buyers, they no longer have the incentive to develop the\nland. There are many cases where developers prematurely get out of the project\nand loss is borne by the buyers. <\/p>\n\n\n\n
Ownership determination\nis a cumbersome process and it\u2019s based on age old laws and systems. Even when\nhousing is developed, it is hard to map exact ownership of plots within the\nland. This means land titles are unclear, and any future value of the land is\nlocked. Moreover, the consumer cannot access formal mortgage financing to build\nhousing units on it. <\/p>\n\n\n\n
Even the land\ndigitization exercise in the previous regime could not safeguard consumers\u2019\nrights. These digital records are normally not in line with patwari records.\nThe patwari has to be involved in the process and if the patwari of any area is\ndishonest, prevalence of frauds increases. <\/p>\n\n\n\n
The poor land recording\nsystem and slow judiciary processes often lock the land value in case of\ndispute, which is a common element in inherited land. Any piece of land coming in third generation\nis highly likely to be the subject of dispute. Even if one person out of tens\nof joint owners refuses to sell, the land titles become ambiguous.<\/p>\n\n\n\n
Currently, there is one\nwindow operation which functions primarily to reduce the time and complexities\ninvolved in the process of development of housing societies. However, this\nwindow does not work as it is deemed on paper. At the back end same old processes\nare in practice. This requires speed money and it\u2019s still open for fraudulent\npractices. <\/p>\n","protected":false},"excerpt":{"rendered":"
Given that it is being considered to give the construction sector an industry status, it is likely that there will be taxation and other fiscal and non-fiscal benefits associated with the decision. The main purpose, however, is to promote housing supply at affordable prices in order to meet the growing demand. One big impediment for classification of housing sector as an industry is its historically informal nature. There are shades of grey dominating this labor-intensive sector. This has to change to boost formal investment, including Foreign Direct Investment (FDI). There are deep rooted issues in land titles and approval processes which hinder formal development. This keeps formal financing institutions at bay from lending to both builders and consumers. Nowhere in the world does housing finance flourish without formal financing and investment. Making a housing society in Pakistan is a pain for businesses as they attempt to operate in compliance with rules and regulations. The inherent advantages are for those who have access to opaque information systems, and for those who can politically and financially maneuver the regulatory departments and authorities. That is why venture capitalists\u2019 and private equity firms\u2019 interest in the housing sector has remained limited. The housing society…<\/p>\n","protected":false},"author":97,"featured_media":82875,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[11054],"tags":[55219,55217,55218,43961,42928],"persona":[32409,35639],"class_list":{"0":"post-82871","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-real-estate-trends","8":"tag-housing-issues-in-pakistan","9":"tag-housing-society-regulations","10":"tag-housing-society-regulations-in-pakistan","11":"tag-lob","12":"tag-zameen-research","13":"persona-constructiondevelopments","14":"persona-property-management","15":"cat-11054-id"},"acf":[],"yoast_head":"\n