NOTE: Frequently asked questions are listed questions and answers, all supposed to be commonly asked in some context, and pertaining to a particular topic. Kindly ignore any question or answer if it do not fit in any context. It is really hard to answer all questions for all contexts.
Do I invest in Property or Not?
Property investment is always fruit full and cannot return into loss if you have holding power. People are investing in Real Estate from centuries. In General property investment called as dead investment. Minimum investment for a residential or commercial property should not be less than 5 years. 10 years is more than enough time to get a hand some return in property investment.
Tips: Dealers / Agents / Builders / Authority (*Business) may highlight an investment for short time period for their interest or benefit.
*A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning.
What is file?
Area which is not balloted yet or has been balloted and on ground or not on ground, and possession (where construction can be started immediately) is not granted by the builder / developer / Authority
Tips: Prices of files may fluctuate sharply (up and down) as per market conditions. Files are usually booked on installment plan for 3 years cost of land and 3 years for development charges in most cases. One should be clear before investing in file that how much time is required for holding
What is plot?
Area where physical possession (where construction can be started immediately) is granted by the builder / developer / Authority
Tips: In common after ballot dealers / agents sell or buy file with plot number and treat it as “PLOT”. But practically we have experienced that developer / builder / authority can change any full and final given plan due to any technical reasons / immoral practice or to oblige some one (specifically Govt. Officials / Army Officials, Authority Officials), in such case plot number change. I think that plot should be only consider where possession is granted and construction can be started immediately. Any investment before possession should be treated as “FILE”
Physical possession (Plots) are more stable in different conditions of market as compare to files or Plot files which shows more fluctuation in different market conditions (up and down). Plots files are called which balloted and plot numbers are allotted but still possession is not granted by Builder / Developer / Authority for living.
What is a Society?
Answer: A Society can be defined an area having Urban planning with following amenities / facilities for residential cum commercial purpose:
Basic Amenities / Facilities:
- Road Network
- Commercial Area
Advanced Amenities / Facilities:
- Play Area
- Any other features like Golf Course, Club, Gated Area, In House Security etc.
There are Three Types of Society Developments in Lahore:
- Developed / Operated by Authority (Lahore Development Authority (LDA) Faisal Town Lahore, Garden Town Lahore, LDA Avenue 1 Lahore, Johar Town Lahore, Allama Iqbal Town Lahore etc.) or Defence Housing Authority (DHA)
- Developed / Operated by Cooperative Body (Wapda Town Lahore, NFC Lahore, Model Town Lahore etc.)
- Developed / Operated by Private Company (Bahria Town Projects, Unban Developers Projects, Izhar Monnoo Developers Projects etc.)
Tips: Lahore Development Authority (LDA) is prime developer and true Master Planner of Lahore. The Lahore Development Authority was created under the LDA Act 1975 duly approved by Punjab Legislative Assembly. Previously it was Lahore Improvement Trust (LIT).
Defence Housing Authority (DHA) is a parallel authority in Lahore in cantonment area and delivered A class housing and commercial projects with state of the art developments and facilities.
Cooperative Bodies like Wapda Town, NFC Lahore, UET and many other also contributed best living standard for Ordinary Man at low cost.
Private Builders / Urban Planners like Bahria Town, Urban Developers Eden Builders and many other also delivered state of the art developments and facilities in Lahore.
How to verify a Society?
After selection of desired area of City where you want to live or invest, next step is “How to verify a Society”
Before investing / buying plot / home / commercial in any society you to have to consider followings:
- Is Housing Society is registered with Securities & Exchange Commission of Pakistan (SECP) or Cooperative Department?
- Is Society land transferred on Society name in Revenue Record?
- Is Housing Society has valid NOC from Local Development Authorities (LDA / CDA / GDA / MDA / FDA as per approved map?
- Is Housing Society has made arrangements for development work like Water, Gas, Electricity & Sewerage etc. on site?
Tips: Pre Launch bookings are highly not recommended. You must wait for official launch of booking by publicly advertised in major news paper (s) with confirm location, booking schedule, installment time frame and tentative time for possession (year of possession).
Before investing in any project you must keep eye on News Paper warnings ads by Local Authorities against projects which are not approved. Usually these local Authorities has a list of approved Housing Societies, as well as Unapproved Housing Schemes lists. You may also visit Local Authority Office and can verify about the scheme before investing.
A marketing company / affiliates / agents may highlight a project which they are dealing with for their interest.
What is a Balloting?
The term balloting was generally used for assigning plot numbers to the allottee for a said project in Pakistan Real Estate. In General Ballot mean “decide the allocation of (something) to applicants by drawing lots”. There are two types of Ballot in Pakistan Real Estate Market in General now:
- Booking Ballot
- Booking ballot mean, when a project is being offered on installment plan and people apply for the booking and ballot held for successful and unsuccessful applicants, called Booking Ballot
- Plot Ballot
- Plot Number Ballot mean a draw in which numbers allocated to each allottee against its file, in other word Map issued with plot numbers.
Tips: Now a day people are often trapped in the name of ballot by Agents / Developer / Builder / Authority. It is recommended to ask Agents / Developer / Builder / Authority before booking any project that it will be a confirm booking or there will be booking ballot, also when Plot Ballot will be held?
Which location is best?
Usually in market Facing Park, Main Boulevard or Boulevard, Corner & locations near amenities are called as good locations, but in fact good location is whatever you can buy in your budget.
What is short term & long term investment?
People often ask “Is it a long term investment or short term investment’? In general mostly people perceive that an investment which will give return in short time called as short term investment, and an investment which will give return in long term will be a long term investment. Where as there is no relation of gain for an investment to be called as short or long term.
An investment time frame can be define from its delivery period rather its gain. A project is going to be deliver in next 1 or 2 years can be treated as Short Term investment, where as a project going to be deliver in next 2 years or more will a mid term or long term investment respectively as per time frame.
Prices for any investment can be rise due to several reasons, so primary criteria to measure an investment time frame should be only its delivery. Next important factor is the pace of occupancy, we must analyze that if a project is located at long distance and being delivered by the developer / builder / authority in short time or mid time but how long it will take to occupy. This is also a very important factor to understand an investment. If pace of occupancy will be fast price will rise with consistent growth, if occupancy rate will slow then prices may come down or remain stable. It will vary from project to project and situation to situation.
Tips: Always ask your agent the delivery time of the project, or contact Builder / Developer / Authority for delivery time of a project.
Difference between Allocation & Affidavit Files?
Affidavit files are agreement between land holder and DHA. When land holder surrender his land in favor of DHA, DHA issue affidavit files in his favor. Usually this proportion is 2 files of 1 Kanal against 1 Acre of land. DHA give a favor to land holder that in affidavit file Seller name is written and Purchaser name is open. In other word you can say it is a open file. Land holder has this opportunity that he can fill the name in Buyer filed and submit it to DHA and attach a transfer fee voucher (paid by buyer) and DHA transfer this to buyer name. Now this affidavit file is submitted back to DHA. For Buyer DHA issue an intimation letter to intimate him that file has been transfer in your name. Now Buyer need to become the Member of DHA. Buyer submit the membership fee to DHA and DHA issue an allocation letter to buyer after due course of time.
Now it become an allocation letter. Now it will be transfer as like plot transfer, NDC will be applied, all Govt. taxed like Stamp Duty, CVT, Advance Tax on Sale and Advance Tax on Purchase & DHA Transfer fee etc. will be applicable. Once it become the allocation all the transfer charges will be applicable on every next transfer. So you can say usually files are first affidavits and then become allocations. However in case of direct allotment like booking or to Army Personal it is directly an allocation file and all transfer fee and charges are applicable on first transfer even, because it is a direct allocation.
- Affidavit file transfer fee vary between 6500 to 20000 for normal to urgent transfer respectively. Purchase is not charges any CVT, Stamp Duty and Advance Tax. Affidavit file can be transfer without presence of Seller and Buyer in DHA Office. But for allocation letter collection Buyer must present himself to collect allocation letter.
- Allocation file transfer fee is charged as regular plot including full DHA Transfer Fee, Advance Tax on Purchase, Capital Value Tax (CVT), Stamp Duty and any other Govt. charges. For Allocation files Seller and Buyer must be present in DHA Office, except Overseas Buyer Transfer or On Behalf of Buyer Transfer in case of DHA Bahawalpur. But for allocation letter collection Buyer must present himself to collect allocation letter.
- Affidavit files rate is more then Allocation files due to difference of transfer fee.
- Affidavit files can be transfer within 3 to 4 days, where as allocations files required NDC and take 7 to 10 days to transfer.
Affidavit is like an advantage for land holder who surrender his land for DHA project. Affidavit and Allocations both files are issued by DHA and are equally secure as the issuing authority is Defence Housing Authority
When Ballot / Development will be held / started / completed?
Most common question after booking of plot / home / commercial by investors in any relevant society by Agents / Dealers. Usually to satisfy their clients, Agents / Dealers answer this question as per best of their knowledge (knowledge is always limited up to any extent). Agents / Dealers communicate with relevant society Front End Management Officials or Customer Relationship Officers (CRO) which usually are not aware of ballot date / development schedule / development status and development completion timings. In result investors get dissatisfied due to mismatch of information or bogus information.
Tips: Always contact Builder / Developer / Authority directly to get right answer for such queries like Ballot Date / Development Status, Completion of Development etc. Only Builder / Developer / Authority can have best answer for this question, only they can give exact or estimated date for ballot / development started and completion.
How much holding time is required for an investment?
Commonly asked question by investors from Local as well Overseas. Although there is no set standard to define the time frame of property investment. Its vary from Project to Project and stage of Project. However generally we should have following time frame in mind for property investment after buying / of plot / home / commercial to get some return.
- Minimum: 1 year
- Reasonable: 3 years
- Sufficient: 5 years
- Enough: 10 years
- More then enough: 15 years
15 years is more then enough to hold a property to get the maximum return at a specific growth rate. Mature projects has slow but stable and secure growth, where as under developed or newly developed projects has faster growth rate but more risky if market drop.
Tips: Before doing any investment you must be clear about your holding time. Do not make any investment with un clear holding time. In property the holder is the winner. If you have holding capacity you are in a win win position. Consult with your agent about your holding time. Do not invest in property if you cannot hold for minimum 1 year time period or other wise you must have to be in touch with daily market trends. If you have enough time to do so then think about less then 1 year investment other wise leave that option. If you are booking a plot or home you must be able to hold it till possession, pre possession sale may return into loss. If you cannot pay the installment please do not book.
Which investment is better Residential or Commercial?
Definite commercial investment has more return in terms or value as well as rental income as compare to residential investment. Residential investments are for personal living or individual and commercial investments are for Business or Earnings.
Tips: Before making investment decision for Residential or Commercial first decide following things:
- Are you going to use this investment for both purpose (residential cum commercial)
- Population size of the area specifically for commercial investment
- Amenities / facilities available in the society for residential purpose
Which investment is better Cash Payment or Instalment Package?
Again I do not have a one line answer for this question. No one else can give answer for this question, only individual can answer him / herself about this question keeping in view the following factors:
- Is your decision is for pure investment purpose to get some return
- Are you going to use this property for your own residence or business purpose
- When you need to construct home or building (after how many years)
- Can you easily pay installments in time when due
- Are you ready to wait until project get developed and possession granted
Tips: Do not book plot or home if you are not able to mature it or cannot wait till possession granted. Investment may be risky and return into loss for pre mature selling (builder or agents / dealers are in “win win” position in this case, only looser can be the investor).
Do I contact more than one agent / dealer for selling / buying decision (s)?
Yes, you should not rely on single source of information. At least you should consult more than 5 agents or dealers before making any final decision for selling or buying properties.
Tips: You can use various online portals to find out agents or dealers in Lahore in different areas or societies. It’s better to contact the agents or dealers having offices in the relevant area or society. Dealers or agents sitting outside your desired area or society may have less information or non-competitive rates as compare to dealers or agents sitting in the same area.
What are commission charges of agents / dealers for a sell, buy or rent deal?
In common it was 2% from both side (seller and buyer) but due to intensive competition in market agents / dealers accept 1% or as per mutual understanding / agreement between agents / dealers and seller / buyers. In Rent case it is half amount of the one month rent as per agreement or mutual understanding / agreement between agents / dealers and Tenant / Landlord.
What is the price for a plot or home (any specified area like: 5 Marla or 10 Marla) in Lahore?
Lahore is too big, it is really hard to answer this question in some words or some line. E.g. 5 Marla plot available in Lahore from 2 lacs to 70 to 80 lacs in Lahore for residential purpose.
Dealers or Agents will only highlight the area / society which they are dealing with or where they can have more benefit or interest.
Tips: Before going in market for research first decide your preferable area or society then do market research for rates.
Where to invest in Lahore (or their relevant city), which society is best for investment or living?
Most common question asked by local as well as Overseas Pakistanis and very difficult to answer without knowing some basic information. In General every area of Lahore is best for living and investment for someone preferences. People are living in every corner or Lahore.
Dealers or Agents will only highlight the area / society which they are dealing with or where they can have more benefit or interest.
Tips: Only individual (buyer) can decide the best suitable area for living in Lahore for him / her self keeping in mind his / her budget, location priority, children education, earning / business location, other family members location or any specific priority (only can be define by an individual him / herself).
Questions & Answers by Mufti at Darul Uloom at Karachi
- Can I sell my flat which is booked by giving some down payment, where as possession is not taken and no construction started at site?
- Can I sell any Property for which I have done Biana, but has not transferred on my name nor I have taken possession of the property?
- Can I sell any under developed society plot, which is booked by me and have made some payment also, where plot number is not allotted?
Please Download following Fatwa for the answers of above aksed questons
Mufti Tariq Masood explaninig the Selling & Buying of booking forms: