Pakistan’s Progress on the Property Rights Index

Introduction

The Property Rights Index measures the physical and intellectual property rights in a country/region based on their legal and political environments. Physical property rights under this index are measured in terms of the real estate sector’s environment. The environment of a region is measured by the legal, administrative, social, and economic factors influencing the property rights of individuals, entities, and companies. In Pakistan, property rights are provided and governed on an ad-hoc basis, which has led to the creation of a fragmented and largely unregulated real estate sector. Several legal and political reforms were introduced, which determined the direction for the legal and administrative system governing property rights in Pakistan.  

 

The Property Rights Index

The physical property rights index is a great metric to gauge the status of property rights and resource governance in a region. This index is also a tool for policymakers, business communities, real estate investors, and even activists to understand the essential role property rights play in creating a prosperous economy and sustainable development. The index also examines the relationship between property rights and other social indicators like well-being, gender equality, illicit trade, innovation, competition, research and development, human development, corruption, and internet connectivity. 

 

Pakistan’s Legal and Political Environment and its impact on property rights

The legal and administrative system of property rights in Pakistan is inadequate and overburdened by an inefficient judiciary. In the absence of an effective legal or administrative system, parallel and informal governance systems like Panchayat and Jirga have taken roots. They are used to transfer property in rural areas of Pakistan. This has also led to the overflowing of the country’s courts with land dispute cases, causing losses worth millions of dollars as litigation costs and even more as locked capital. Creating a pluralistic legal environment overseeing property rights has severely impeded the provision of property rights in Pakistan. 

 

Registering Property in Pakistan

Despite formal laws mandating property registration, there is no incentive for the common man to register land. Most of the freehold land in Pakistan tends to be retained by families and passes intergenerationally through inheritance. Since inheritance is the primary means through which most people acquire land, registration of ownership hardly exists. To make things worse, the existing procedures of registering property are highly complicated and lengthy. According to a World Bank Report, registering a land transaction in Pakistan involves six procedures, an average of 50-60 days, and costs 5.3% of the property value.  

The formal procedure for the land registration system begins with the engagement of a lawyer or deed writer to draft the transaction document on stamp paper. Next, the involved parties take the document to the Land Registrar, who verifies the parties’ identity and checks the legitimacy of the people to be involved in that transaction. To register the change in the property or change in ownership of the property, the owner must take the document to the patwari or the Board of Revenue to record the difference in the Record of Rights. The Record of Rights is a collection of various revenue papers regarding an estate and contains information about the revenue matters, rent payable, and the names of the landowners and tenants, along with their obligations and rights. The cumbersome and tedious process discourage plenty from taking the legal route in registering or maintaining the documents of a property, which results in a plethora of land administration issues in Pakistan.

 

Way Forward for Physical Property Rights in Pakistan

Considering the state of property rights in Pakistan, governments have realised that to have a stable, secure real estate sector, the regularisation and standardisation of all laws and rules are mandatory. Besides this, the government also aims to oversee the real estate sector as an engine of economic growth, regulated by a central body. Recently, the establishment of a Real Estate Regulatory Authority (RERA) is in the pipeline with the government trying to collect enough political mandate, human resource capacity, and administrative ability to bring the sector under its supervision. If successful, the pluralistic legal systems that dominate land administration, the creation of cartels in the real estate sector, and lack of standardisation of practices can be dealt with efficiently.