The Competition Commission of Pakistan (CCP) Monday recommended the establishment of a ''Real Estate Regulatory Body'' and a complete overhaul of the existing legal framework covering the real estate sector to protect the interests of all stakeholders, particularly the investors and general public.
This opinion has been given by the CCP here on Monday to provide a detailed insight into the issues raised by the different stakeholders and the recommendation that the Commission has proposed for the real estate sector in Pakistan.
The Competition Act 2010 empowers the CCP to hold open hearings on competition issues and offer its recommendations to the government through an opinion. The CCP had held open hearings on the real estate sector to note the concerns of the consumers, investors, relevant government bodies, and other stakeholders regarding the pertinent issues in the property market of Pakistan. Subsequent to the well-attended open hearings, the CCP thoroughly studied the relevant laws and conducted its own research to get a grasp of pertinent issues.
The CCP''s opinion offers solid recommendations to the government to protect the interests of the consumers and investors alike through a well-defined regulatory mechanism and revamping of the legal framework.
The proposed regulatory authority may act as a Real Estate Regulatory Body to coordinate and advise all efforts of the government, regarding the development of real estate sector. The functions and powers of the proposed authority include registration and regulation wherein it will be responsible for pre-registration/licensing, renewal of licence of developers, promoters, project managers, and real estate agents/brokers/dealers.
Under its powers to undertake registration and regulation, the proposed authority may also define and issue eligibility criteria and qualification for market professionals and intermediaries and prepare a code of conduct for the sector. Moreover, it will be a standard setting body for issuance of uniform standards, code of practice, and regulations for smooth and transparent conduct of real estate sector. It will also be responsible for issuing of advertisements and regulation of deposit/trust money.
The CCP has also suggested that such a regulatory authority may be given enforcement powers to address the consumer issues through a specific consumer complaint handling system. In this regard, the proposed authority may also be empowered to carry out inspections, inquiries, investigations and subsequent enforcement actions including imposition of penalties and restrictions.
The CCP is also of the view that the proposed Real Estate Regulatory Body may enjoy the powers of a quasi-judicial body and the authority shall have the same powers as are vested under the Code of Civil Procedure, 1908.
In CCP''s opinion, the proposed regulatory body will also impart training and certifications to brokers and agents. The purpose of this suggestion is to promote the technical education of brokers and dealers and training and certification of real estate market professionals including appraisers and valuers.
The CCP further suggests that a national level computerised database be developed, which should contain complete information regarding a property including the exact location comprises Khasra, Aks-e-Shajra, etc, details; details of owners of the property like Fard-e-Malkiat, etc; and details of the real estate agent who was involved in facilitation of the transaction, who should also be held responsible in case of a dispute.
The proposed regulatory body should publish and maintain a website/database of all records of real estate sector, with an updated status on registration, title, regulatory NOC, etc, and convert the conventional land record system on modern day''s information technology-based systems.
In the second part of the opinion, the CCP discusses the legal framework and recommends reviewing the existing laws and incorporating appropriate amendments. The lack of uniformity in the real estate sector regarding the applicable laws is a serious issue for the consumers. Further, there is an inherent conflict in the laws governing the development authorities with special reference to competition issues as the regulators, ie, LDA, CDA, FDA, GDA, etc, are not only performing the functions of the regulators but are also undertaking economic activities by launching their own housing schemes. The regulators, ie, the respective development authority, becomes the competitor of its own regulatees.
In addition to the foregoing, the complaint resolution mechanism is also discriminatory in a way that a complaint against the housing scheme or project launched by the development authority is to be processed and forwarded by the development authority against whom the complaint is launched.
Furthermore, the laws with reference to the registration of the real estate agents are too outdated and contain minimal penalty. A complaint against the non-compliant real estate agent can only be filed by the registering authority and no remedy is available to the consumers. This makes the applicable laws purposeless and ineffective. Hence, the laws vis-à-vis the registration of real estate agents and the complaint resolution mechanism and penalties must be revised.
Similarly, the outdated laws regarding the land acquisition and transfer of property, ie, the Land Acquisition Act, 1894 and Transfer of Property Act, 1882, which were aimed at enforcing the British rule in pre-independence era, must be revised owing to the changed market conditions and evolution of rights of the consumers, in particular, keeping in view the fundamental rights guaranteed under Article 23 & 24 of the Constitution read with Article 38 thereof.
An important issue raised during the public hearing was the inordinate delay in resolution of disputes regarding the real estate sector. Hence, it is important that appropriate amendments be made in the respective laws to provide for expeditious disposal of cases in the real estate sector treating it as a special subject, preferably a time limit of six months to one year be prescribed for expeditious disposal of cases, be it by the special tribunals/courts or by the court of ordinary jurisdiction, the CCP added.