Just like every other industry in Pakistan, the real estate market is booming at a rapid pace. As great as the real estate industry is; there are a lot of issues that come along with it. With such immense growth, the real estate industry was left unchecked and hence the RERA (Real Estate Regulatory Authority) was announced by the Government of Pakistan.
Issues faced by real estate sector
The first and most major problem faced by the real estate sector is the need to boost the investor confidence and this can easily be solved by addressing the following issues:
Property-related issues in Pakistan take years to resolve or sometimes even decades. These legal disputes lower investor confidence and as a result, it freezes capital, pushes away new potential investors and destabilizes the market. Disputes such as the title of property, inheritance and property ownership are overlooked by the judicial courts.
Updating laws is a must. There should be certifications and degrees in real estate education. Cases pertaining to real estate should be decided fast and those guilty of frivolous litigation must be punished. New laws need to be made in order to regulate the relations between consumers, investors and housing societies.
The Federal Board of Revenue (FBR) Directorate General of Immovable Property (DG IMP) was established recently to see some of these problems. However, while some sections 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. In 2023 budget, FBR has increased the tax rate for sellers and buyers of real estate properties. Along with that, non-active tax payers are listed and they are required to pay the due taxes.
An authoritative body that is primed for the welfare, modernization and exclusive oversight of the real estate market is still needed. This is where RERA can truly play a decisive role.
How can the real estate industry benefit from RERA?
The act will require real estate agents to enroll with RERA to sale properties. Before any project work is initiated, RERA will also require prior permission because the developers will need to send information on their previous projects along with a complete plan for the development of the venture. No promoter can sell or buy a plot or post an advertisement without permission.
In the event of a breach of the conditions of the power as established to safeguard and encourage the freedoms of immovable officials, RERA will be also authorized to revoke proponents’ licenses. The Authority will serve as a public advisor on multiple growth initiatives to further promote growth in the real estate business.
In addition, the main consultative board will be formed to supervise consumer rights with officials from ministries of the interior and finance, national housing authorities, Naya Pakistan Housing Authority, and a ministry of law and justice additional secretary-level officer
Moreover, overseas Pakistanis are an asset in the development of the country’s economy. Their remittance flows have for long offered an almost consistent source of relief for the cash-strapped treasury.
As an added feature, RERA would help to resolve any trust problems and issues faced by Pakistanis from abroad. It would also allow the government to maintain a series of stable policies to counteract policy vagaries.
Some other duties expected of the RERA are:
- Have a 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
- Modernize 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 the smooth working of the real estate sector
- Handle real estate-related consumer complaints
- Have powers to inspect, penalize, and enforce its decisions
RERA delivers a robust, secure, transparent, and sustainable regulatory real estate environment that encourages investment whilst protecting the rights and interests of consumers, investors and all stakeholders in the real estate sector. With the launch of the RERA, Pakistan will be able to take a strong position in the global real estate marketplace.