Is Property in Pakistan Easy to Buy or Sell?
For buy or sell property in Pakistan, it is said that selling property is more accessible than buying, and the same goes for Pakistan. This is likely because, in most situations, while dealing with property sales, the sellers are exempt from paying erratic taxes and development fees, among other things. Not to mention that selling property in Pakistan isn’t always a stroll in the park. In the real estate market, you must outperform the competitors.
The reason for this is that the property market is saturated with sellers. However, by implementing the tactics outlined here, you can learn how to sell or buy property in Pakistan sensibly, swiftly, and profitably. If you have a home to sell or are looking to buy a property and are reading this, now is the moment to fill your cash-flow bucket.
Why Is It Not Easy to Sell Property In Pakistan?
Buying Property in Pakistan is accessible only for the upper class but is ridiculous for the lower class. For example, if a person who has no information about this sector goes to buy any plot or home, he is more likely to face fraud because of the no-tracking system in Pakistan.
The rate for an area is 10 lac, but the dealer can say it is worth 15 lac, as the government has no input in this cause. So, the first main point is that Rates are not Uniformed. The other issue is, that fraud occurs when a single piece of land is sold to more than one person, until or unless you are clever enough to investigate through ownership details etc.
Then the registrars or in Urdu ( Patwari). He is the person who is responsible for making the exact location of the plot. For example, on the area of 100 acres, you have a plot of 10 Marla. It is not sure in its initials to make the exact measurement of your plot, where the phase is going. The agent can take you to any random area of the upcoming society and tell you that this land is yours. But after the completion of the social project, many buyers of the plot are left bare-handed after finding that there is no area left, and the area has already been sold to someone else.
What Role Is the Government Playing To Make This Sector Safe & Sound
In the real estate sector, anyone without any prior knowledge is entering this sector because they have the perception that this sector is creating a lot of wealth. They create their own rules, just like an Idiom that states, “Whatever sails your boat.” The government has taken a particular interest in the growth of the real estate industry. As a result of this interest, additional pro-real-estate policies have been enacted, attracting more potential & reliable investors.
The government of Pakistan has taken various actions to improve the real estate sector. Persons who own an immovable property with a land area larger than or equal to 500 square yards and a flat with a covered space of 2,000 square feet or more are required to file returns under the Finance Act of 2009. The decision was made to broaden the tax base.
In 2010, the Federal Reserve Board issued a circular authorizing provinces to collect Capital Value Tax (CVT) on immovable property. It is a tax on the capital value of the purchased asset that the buyer pays at the time of purchase. Capital gains tax (CGT) on sales of immovable properties with a holding duration of fewer than two years was introduced in 2012 by the Finance Act 2012. This meant that persons who had previously been exempt from paying taxes in the home construction industry were now able to do so.
This significantly impacted the real estate market, slowing the sale and acquisition of newly constructed properties. However, the plan paid off in the long term, as the government’s tax collection grew due to the move. In 2014, the law was changed to impose a 10% CGT on the sale of properties withholding periods of up to one year and a 5% CGT on that withholding duration of up to two years, with no CGT imposed on properties withholding periods of more than two years.
Non-filers were forbidden from purchasing a property worth more than Rs 5 million after an amnesty scheme for the reporting of undeclared assets was launched in 2018. All of these real estate policies have had a negative influence on the sector in the long run. The government strives to improve tax revenue collection without realizing the ramifications of slowing down real estate growth because the industry is considered a tax haven for ill-gotten money.
Conclusion:
The real estate business is as complicated as any other investment sector because estimating property prices and future earnings is extremely tough. For this purpose, the investor must have access to precise statistics about current real estate market prices, which is a challenging assignment in Pakistan because the property sector’s most significant difficulty is a lack of simple access to trustworthy information. On the other hand, instead of examining themselves, our investors succumb to the enticements presented by fraudsters. If people invest wisely in this industry, they will not have to deal with fraud situations.
Stay tuned to Feeta Blog to learn more about the property in Pakistan.
Is Property in Pakistan Easy to Buy or Sell?
Selling Property with Occupying Residents
Selling a property can sometimes be a difficult task. If you have tenants who still live inside while you are trying to sell and give tours of the property, things can get even more difficult. An excellent level of diplomacy and care is required as you want to give a solid first impression of the property to potential buyers, but also the current tenants still need to live in the space and have access to their belongings. You will need to make sure that your tenants are taken care of and protected throughout the process. The following will explore some of the critical steps you can take to make it easier for everyone to sell real estate with tenants inside – you, the tenants, and potential buyers.
Understand The Rules
You have an absolute right to sell a property you own, even if tenants still live within it. The key factor in this process, however, is that certain ongoing rental agreements must be honored by the new buyer. This means that if your tenants have seven months of lease remaining when the property is transferred, the new owner must allow the tenant to stay for those seven months, paying what they previously agreed to pay. If there is no lease agreement, the tenants will have to agree to leave if the new owner wants them. If they refuse, the new owner will have to go through a traditional eviction process, and the tenants will be legally regarded as occupants.
Communication Is Key
Like relationships and other projects, communication is the core foundation on which this whole process will rest. You need to be completely upfront with your tenants about considering selling and what the process will mean for them. It is a good idea to explain the legal obligations of the next landlord to honor their current rental agreement. Explain what they can realistically expect when ownership changes hands and when their licensing agreement ends. Explain that there is a chance that the new owner will want to make changes or renovate the property and earn more in the future. The more honest you are, and the sooner you share this information, the better your chance that your tenants feel they have the time and information they need to navigate the new situation. If you have established faith, there are many more chances that your tenants will help when it comes to shows. Moreover, you want to be completely transparent about when shows will take place and warn people as much as possible. Everyone has bad weeks where they need a day to order before guests come.
Notice
If you have tenants who do not have a written lease (i.e., they pay rent monthly), you are legally required to give them at least one month’s notice of the sale so that they have time to relocate if the new owner demands it. As explained in this article at HBRColorado.com, if the tenants have been living there for more than twelve months, you must legally give them two months’ notice. As you probably know from your profession, one or two months is not always enough to comfortably find a new life situation. If possible, give your tenants more time than this. A high-level notice will also give them time to work out the emotions of leaving their home when they weren’t expecting and better increase the chances of a smooth transition for everyone without any problems.
Address Problem Tenants
If a tenant is very dissatisfied with your decision to consider a sale and threatens damage to the property or some other annoying reaction, you always have the option to convince them to leave when the property changes ownership. Legally prosecuting an eviction can be incredibly expensive and time consuming. Many landlords find it much easier to offer tenants money to relocate. Many people in this world would happily take a few hundred dollars and relocate without any problems. This is often the fastest and least frustrating way to change a rental, as some experienced landlords will tell you.
Planning Views
As stated above, if you have a good relationship with your tenants, viewing should be relatively easy to set up. Respect tenants’ schedules and requests. If they say you have to be out by 4:00 because they have to prepare the kids for football practice, do your best to be out by 4:00. Legally, a tenant must be informed of a visitor at least 24 hours in advance.
It is important to note that if a tenant has a written lease, it is in accordance with their legal rights to refuse to view. You may need to agree with your tenants to change their minds, including possibly paying for their time while the visitor is in their unit.
Selling With Tenants Can Lower The Sale Price
Considering the legal standards for when rent is allowed to increase and how much, it is possible to sell your property with tenants still tied up could result in a lower sale price. A potential buyer knows that they will not be able to increase the cost of renting until the tenants ’lease ends. Moreover, a potential buyer might feel that a tenant is happy or not about the change of ownership and may want to avoid the property if he or she feels that the tenants could be causing problems.
Work With a Real Estate Agent
If you own some real estate, you might be quite comfortable with the process of buying and selling real estate and tempted to sell on your own. Selling with tenants who have rentals that will need to be confirmed, a real estate agent could be a big help. An agent will know which buyers are looking for rentals for an existing easy cash flow (meaning people who are willing to have a rental unit not vacant) versus which buyers are looking to renovate and raise prices. With this information, a real estate agent can bring you the right potential buyers who will be willing to work with the situation in which you find yourself. An agent can also help you accurately assess the property depending on the tenant’s situation.
Clean Things
As with any real estate sale, cleaning things up before viewing and promotional images can be a big help. If you have a lot of tenants, there is often a greater chance that community areas will be less cared for (the tragedy of the commons is a whole economic theory that applies shockingly perfectly to rental properties). Take the time to clean up any trash or other debris like a dog skating in the grass. Give the hallways, washrooms, stairwells and all other places good refreshing cleanliness. Your tenants will probably enjoy this as well.
Do Inspection
It is especially important when you have tenants to do a new inspection when you are thinking of selling. People are usually not as gentle about the properties they rent as those they own, which means that since the last inspection there could be some fountain problems or other problems that could be dealt with before sale. This can save a lot of time due to contingencies later, especially if it turns out that the place is not as great as you previously thought.
Restrictive Appeal Is Essential
If you’re not sure what kind of trim you need to make to the property before selling, a wonderful rule of thumb is to work with the outside. Get lawns trimmed and trimmed. Repair holes in the driveway or parking lot. Give shutters fresh paint. La first impression when you sell a property is the most important impression. This is doubly true for real estate that someone will rent later, as potential buyers will think about the first impression their potential tenants will have when they arrive to view or browse photos online. Some more handy tips include:
- Add some fresh and lively greens.
- Consider painting the front door (many people have a strong emotional reaction to the front door, as this is symbolically their connection to the property).
- Make sure all the exterior lights are working, as you can bet that a potential buyer with some prudence will drive past the venue in the evening to get an idea of what the tenants and properties are like at night.
- Clean the drains.
- Replace rusted letterboxes and identification numbers.
- Power wash the outside if necessary. Over time, side and brick coat with dirt, but often that happens so slowly that you don’t really notice it, so you may not know how badly it needs to be done.
The above tips should help you understand the process of selling a property that has tenants tied to it. Again, maintaining honest communication is essential if you want this process to be smooth.
For more information on the real estate sector of the country, keep reading Feeta Blog.