The Pakistan Institute of Development Economics (PIDE) has conducted a study into private housing societies in the country and their legality. While this debate is not new, it has recently garnered more attention than usual in popular media.
Consider just Islamabad for a moment — according to the estimates shared by the Capital Development Authority (CDA) there are nearly 140 illegal housing societies within the capital city alone.
CDA published a list of 64 “authorized” societies, with the aim of informing and warning the public of potential scams involving investing in illicit societies.
However, the PIDE’s research revealed that only 22 of these listed societies have obtained no objection certificates (NOCs) from the government. “This puts legal societies at 10 percent of the total,” the PIDE report revealed.
According to a government report dated 2019, the CDA has not launched any new residential sectors over the last 20 years, despite the rising demand for housing in Islamabad. Instead, the private sector was encouraged and provided incentives to operate in the housing market.
While the CDA might have stayed away from launching new projects, it continues to have an extensive regulatory regime governing the development of private housing societies in Zones 2, 4, and 5 of the Islamabad Capital Territory (ICT).
A sponsor needs to go through over two dozen steps to register a housing society. The report revealed that the average time taken by the CDA to approve an NOC is two-and-a-half years, as well as at least a decade (extendable to two decades) for the construction and development that follows the issuance of the NOC.
Despite such a comprehensive set of rules, the actual regulation standards by CDA show a bleak picture. Furthermore, the process of seeking and obtaining permissions and NOCs is so complicated and time-demanding that many sponsors choose to avoid it altogether.
Despite such comprehensive set of rules, the actual regulation standards by CDA show a bleak picture. Furthermore, the process of seeking and obtaining permissions and NOCs is so complicated and time-demanding that many sponsors choose to avoid it altogether
2] Neither are these 140 societies are registered with the Securities &amp; Exchange Commission of Pakistan (SECP), nor have they approached the CDA for the approval of the LOP and the issuance of NOCs.
In 2017, the Auditor General of Pakistan (AGP) conducted a special audit of the Housing Societies Directorate of the CDA for 2011-16. The audit uncovered serious irregularities and non-compliance in issuing of NOCs, including the issuance of an NOC on fake documents, or without proof of ownership of land, or for areas outside of the ICT.
The report also showed that the internal audit system was weak and could not identify the financial irregularities within the department. It also shows that a lack of checks and balances meant that there was no fixing of the responsibility for the losses that innocent investors incurred.
“The Housing Directorate of CDA is neither adequately equipped to inspect the area for illegal construction nor has the powers for demolishing illegal constructions,” PIDE report said.
The CDA had issued only 22 NOCs over the last 30 years in Zones 2, 4, and 5; but these schemes cover only 6.8 percent of the total land of these zones.
A major chunk of the land being sold under the garb of housing societies – total of 1.26 million kanals – is under illegal possession. On top of that, 99 percent of these illegal societies are incomplete.
Another factor highlighting the inefficiency of the regulatory body is that 90 percent of the land in the above-mentioned zones is not even under the CDA’s influence or control.
People have lost their hard-earned money – to the tune of Rs. 5,200 billion (AGP, 2017) – in these illegal societies, the audit report revealed.
Source: Pro Pakistani