Property Buying Guide: Tips for Purchasing a Property in Pakistan

Why Should You Invest in Pakistan?

While the real estate sector of Pakistan is known to offer high return on investment, it is not all that simple to make a breakthrough. In fact, even the wisest of investors can err when it comes to making a sound decision relating to property in Pakistan. You have to exercise your best judgment after making some important considerations to ensure that your hard earned money safely and successfully delivers the anticipated profits in the predicted time period.

Many external factors can also influence the outcome of your investment. A fragile political system, widespread corruption and unrest in some parts of the country can have an impact on property prices in Pakistan.

However, this should not deter you altogether from investing in Pakistan. Many expats working in Saudi Arabia, UAE and elsewhere understand the fact that they must fall back to their home country at some point in time. It is common norm for these expats to look for investment vehicles that are most appropriate for them. Most of these expats prefer investing in property as this decision offers multiple benefits. For one, you get to own a house or land that will appraise over time. If you buy property in a safe and popular community, such as DHA or Bahria Town, you can anticipate positive returns over a given period of time. Should you ever fall back to your home country, you also have the option of building a new house if you have bought a plot or directly moving into your home if you invested in a house. Investing in your economy is also a great way of giving back to your people and your country. By shifting your accumulated wealth from a foreign country to Pakistan, you give the local economy a good boost that is necessary to keep the wheels of finance spinning.

Local investors too, can benefit from these resources that aim to empower you with the tips and information you need to make the right buying decision.

In fact, it really doesn't matter if you're a local or foreign investor. There are many local investors who have got their investments stuck in one way or the other, while a number of foreign investors have spent their money to yield great returns at the same time. The key point you must understand is that while buying property in Pakistan is an excellent decision, it is equally important to use your best judgment after determining different factors relating to your investment to ensure that you get maximum benefits from your efforts.

Understanding Property Risk

While there isn't any investment that is devoid of risk, it is important to understand the risk associated with buying and selling property in Pakistan. Some of these risks can be minimized. For instance, if you're careful in evaluating the product you're purchasing, verifying its authenticity, matching it to your needs and requirements, and carrying out a reasonable appreciation of the community in which you're looking to invest, you are more than likely to mitigate most of the risks involved with your investment decision.

Understanding some of these risks takes time, so never rush through the process. Think of investment as a sequence of events in your mind. Your task is to fit in every sequence so you can see the whole picture clearly in your mind. Never finalize your decision until the entire sequence is completed. If the sequence is complete, you will find it very easy to walk through the entire sequence in your mind. For instance, if you are looking to buy a house in I-8 sector of Islamabad, here is how the sequence may look like: you have verified the owner of the property, a reliable agent who has adequate presence in the region is involved, the commissions are agreed to, any hidden costs, such as housing taxation have been taken into account, the transfer charges have been accounted for, the seller has been verified, their CNIC has been checked through NADRA's SMS verification service to ensure that their government record is intact and updated. For extra precaution, you can also consider involving a lawyer who understands real estate matters to assist you with your decision. While an advocate is not hired by everyone, many of the other considerations must be made before you finalize your decision.

Types of Property

This is another important consideration you must make. Find out  if you need arable farmland, plot, house or a commercial entity. Irrespective of the property type you choose, you must go through endless paperwork to ensure that your investment is well-documented and complies with all the legal and administrative procedures of registration.

It is important to understand some common terms and jargons that you will come across when dealing in property-related transactions.

Sale Deed, Sale Agreement or Registry

The sale agreement, sale deed or registry of a property encloses important details about the property transaction, including the party names, property number or any other identification of the property, sale price, details of payments, and more. As a potential property buyer, you must ensure accurate and elaborate drafting and preparation of these documents. It may even help to consult legal expert for assistance in preparation and execution of the sale deed.

Title Document

A title deed or allotment letter is used in some cases to declare the ownership of a particular property. Many commercial and residential developments, such as housing societies, residential compounds and commercial towers, such as Bahria Town and Defense Housing Authority (DHA) use title documents to reflect ownership of properties in their area of jurisdiction.

Property consultants can guide you about the ownership documents used in particular residential or commercial projects. You can also consider visiting the head offices of the concerned projects and communities to inquire about the authentic and accurate ownership documents.

The sale deed or title document is the only document that confirms the ownership of a property. If you are interested in obtaining a loan against your property, you are required to produce the original title document. When selling your property, the title document is passed on to the seller. However, always ensure that you retain a copy of the title document or sale deed for your record.

There can be instances when you purchase a large area of land, but then decide to sell a portion of it. In such case, you don't need to give the title deed to the seller. Instead, you only need to hand them certified copies of the ownership documents, alongside a sale agreement that includes details about the portion of land being sold.

Stamp Duty

The provincial government imposes stamp duty on all transactions relating to property. Generally, the buyer pays the stamp duty, which is usually determined as a percentage of the property's value at the time of sale. The value of property shown in the sale deed will be used to determine the amount of stamp duty imposed on the transaction. It is paid at the time of registration of property transaction.

Registration

The official recording of sale and purchase of a property is known as property registration. It is normally performed by the office of sub-registrar. To register your property transaction, you are required to get the finalized sale deed stamped and registered by the concerned office of the sub-registrar. The purchaser and seller must be present at the time of registration, though overseas Pakistanis can authorize an attorney to complete the transaction on their behalf.

Transactions involving agricultural land require the preparation of "Fard," a document that encloses land details, such as ownership, quality of land, payment details and the present cultivator of the land. If you are purchasing agricultural land, you should ask for a fresh copy of Fard from the owner. A 'patwari' or revenue official issues a new fard in the buyer's name when a finalized sale deed is presented at his office upon the completion of the transaction. The land purchaser must ensure that the new Fard entitles him as the  new owner and cultivator of the land.

Important Property Transaction Tips for Property Buyers and Sellers

• Take a good look at the historical record of ownership of the property. If the property has had a defect in ownership, you should immediately step back, no matter how irresistible the price and terms of transaction are. The property may still be under dispute. There's no telling when someone may claim ownership of the property. Before finalizing any property deal, you should consider consulting legal expert to investigate the ownership record of the said property. This is usually achieved by physical inspection of the property, confirming the presence of the property from neighbors, and by obtaining and verifying the records from the relevant office where the property transactions have been registered.
• There are some instances where buyers end up buying mortgaged property from sellers. You can stop this fraudulent practice by demanding the original copy of registry, title document or allotment letter. If the property is mortgaged, the seller will not have this document. You should also verify the authenticity of the document by visiting the concerned office where the property transactions are documented. Get a written declaration from the seller stating that the property is not mortgaged in any way.
• Confirm that the property seller has title and possession of the property. In disputed properties, a seller may have partial or no possession of the property. It is also important for the seller to have the right to transfer property in the buyer's name. In some disputed properties, a legal body, such as court may issue stay, preventing the property from being transferred or sold.
• If you are purchasing a constructed house or building, ensure that it complies with the development codes of the concerned planning and municipal authority.
• Make sure that there are no tenants in the property.
• Check that all dues on the property are paid, including utility bills, property tax and any other charges.
• The buyer must take possession of all original documents, such as new title deed and allotment letter. The buyer must also retain original copy of the sale agreement made with buyer on a stamp paper.

Tips for Buying Hot Property in Pakistan

Find the next hot property in Pakistan!

There are many properties in Pakistan that sell like hot cakes. If you're looking for a safe and secure investment in property, the main cities of Islamabad, Karachi and Lahore offer many great options with potentially lucrative returns. Other popular cities include Peshawar, Faisalabad, Gujranwala, Jhelum, Dina, Mangla and Hyderabad.

Finding the best property deals involves a lot of time, research and effort. Potential buyers and real estate agents alike seek lucrative properties that ensure the best returns on investment. However, the process may take weeks, if not months, before you can finalize such a deal. Even if anything worthwhile gets advertised, you will have to make a timely and well-prepared leap to ensure that you close the deal before another investor steps in.

Keep in mind that some fraudulent sellers advertise lucrative deals on real estate listings and then try to rush you through the process of completing the transaction. The buyer is so lured by the low price of the property compared to its market value that he tends to overlook the verification of relevant property documents, such as title deeds and registry. Many buyers have fallen for this trick. Don't be one of them. The top investment products will keep hitting the market, but one wrong move is all it takes to jeopardize your hard-earned savings.

Create a Property Hunting System You're Comfortable With

We call it a system for a reason. You have to meticulously stick to it for weeks and months until you find the deal that fully meets your requirements. Until you get there, you have to practice patience. If you try to rush through the process, you are more likely to falter at one point or the other, leading to poor buying decision. A calm mind will help you in making a sound investment decision.

The system need not be complex. Find out the number of hours you are willing to spend every day to find the property. During this period, log on to the property listings and portals and use their search functions to sift through different property types, price range, size of property and other details. Shortlist the properties that you find interesting and start contacting the agents or owners who have placed the ad.

In this way, you can also identify reputable property consultants dealing in the areas and property types you're interested in. You can use these resources to perform market research of the property you're considering. This will help you establish a fair market value of different properties and accordingly look for the most lucrative deals.

It also helps to consult property buying guide, such as Homes n Farms Pakistan to help you make a sound and well-informed property buying decision. We welcome any queries and comments relating to real estate in Pakistan. However, keep in mind that we only deal in the most well-known real estate commodities, such as CDA projects, DHA and Bahria Town to ensure the best and safest returns on our clients' investments.

Ensure Timely Access to Funds

A hot property deal won't last too many days. As such, you have to ensure a timely access to your funds. Again, this does not mean that you compromise or overlook any aspect of the buying process. However, it still helps to have an easy payment solution before finalizing your deal. This prevents any hiccups at the eleventh hour. There can be many unexpected delays in payments, and if you have made token money, advance payment or biyana, you will be bound by time to arrange the funds and complete the transaction.

Look for Auctions

It also helps to look at different auctions held in the city or town of Pakistan where you want to purchase property. Auctioned properties are usually sold below market value. If a house is being auctioned, consult a few real estate experts to determine the fair market value of the property in question. You should also consider inspecting the property physically. A construction and renovation expert can also assist you in determine the cost of repair and renovation, allowing you to determine the value of the property accurately.

Only Stick to Profitable Localities

We strongly recommend clients to stay away from unprofitable locations. Investing in popular destinations, such as Bahria Town and DHA in Islamabad, Lahore or Karachi will not only keep your investment safe, but also help you generate decent profits from your investments.