Real estate

A Critical Analysis of Illegal Housing Societies

By 06/01/2022 January 11th, 2022 0 Comments

Pakistan's 1st Real Estate Think Tank


A ‘Housing Society’ refers to an infrastructure development project with the objective of providing its members [inhabitants] with houses, plots, common amenities, and services associated with a good standard of urban living. The Capital Development Authority (CDA) has not launched any residential sector in the past 20 years in Islamabad. An opportunity emerged for the private sector to fulfil the residential needs of the rapidly urbanising society. Currently, Pakistan is experiencing mushrooming of housing societies in all the major cities. A whopping figure of 3,263 housing societies is recorded in Punjab alone, comprising approved, unapproved, and illegal housing societies (E-Khidmat Markaz, 2021). Moreover, the legality of private housing societies is a pressing issue due to the recurring concerns of ‘capital trap’ and ‘dead investment’ in the real estate sector of Pakistan. According to the figures projected by CDA, Islamabad has approximately 64 authorised housing societies and around 140 illegal housing societies (CDA, 2021). The regularisation of housing societies is cumbersome, which leads to further delays in obtaining NOCs. However, many illicit societies are operating on the sole premise of minting money through ‘Customer Advances’ without any intention of obtaining NOCs or Layout Plans (LOP).

This research article by the Iqbal institute of Policy Studies will analyse Illegal Societies in the context of requirements of registration and regularisation.

Housing Societies – Necessity or Luxury?

According to UNDP, Pakistan faces an accumulative housing shortage of around 10 million units. The rate of urban population growth has divulged in contrast with the availability, development of housing units, and access to land for residential purposes. As a result, the country is experiencing an acute housing shortage and rapid growth of slums in urban peripheries. If urbanisation trends are studied, it can be observed that the rapid surge in population growth and urban expansion does not match the corresponding growth of employment, housing, and productivity in many developing countries. A lack of regularisation has resulted in rising inequalities, degradation of the environment, and poverty in society. The menace of illegal housing societies is one of the many challenges faced by Pakistan due to urbanisation. Even though the government of Pakistan aims to develop low-cost vertical housing schemes to accommodate a large number of people in a compact place and combat the issue of rising urban sprawl. However, Pakistan’s geographical landscape, lack of funds, and susceptibility to natural disasters (earthquakes, floods etc.) are the main challenges in implementing the proper policy framework and building codes for such schemes (Artaza, 2020).

Given the existing predispositions of the post-COVID world, the bigger challenge is achieving economic stability while developing a policy framework to combat urban sprawl. In such circumstances, the housing crisis becomes more of a necessity than a luxury. Amidst the housing crisis, Pakistan needs affordable, low-income, vertical housing schemes and plans instead of the high-end housing schemes in posh localities. The high-end housing schemes have developed into the lucrative investment opportunity for ‘surplus capital injections’ instead of meeting the residential needs of the community. Real Estate is considered the best investment in Pakistan, whether land or residential houses. However, the illegal housing schemes are using the investors’ willingness to invest as an opportunity to trap people in an unwarranted web of debt capital.

Requirements of Registration

The process of registration of housing societies involves the submission of various documents, obtaining NOCs, and approving the Layout Plan. The primary step to start the process of developing a housing scheme is ‘Acquisition of Land’. In Islamabad, the developer of the private housing scheme is required to submit a set of documents to CDA, including three (3) copies of the site plan as specified, three (3) copies of the survey plan showing khasra numbers, three (3) copies of Layout Plan prepared and signed by a consulting firm registered with PCATP and drawn as specified by CDA, attested copies of Fard, certified Shajra showing true possession of the land, Non-Encumbrance Certificate by the Tehsildar, and Master Plan Concept Report and Mutation in favour of owners (if required) (Hassan, 2021).

On average, the CDA takes 2 to 3 years to approve the NOC. The average time for development work before the approval of NOC is 12 years, which may extend to two decades in many cases. These lengthy procedures and timelines are the reasons for the reluctance of developers to register their societies. According to the special audit conducted by the Auditor General of Pakistan (AGP), CDA has only issued 22 NOCs in Zones 2, 4, and 5 in the last thirty (30) years. Such housing schemes cover a mere 6.8% of the total land of these zones, whereas a great chunk of land, 1.26 million kanals, is under illegal possession and sold on the pretext of investment in housing societies. Around 99% of these illegal societies are incomplete, with investors stuck in capital trap amounting to Rs. 5200 billion (PIDE Blog, 2021).

Regularisation of Housing Societies

Around 69% of housing societies in Pakistan are un-registered. In a recent cabinet meeting, the Government of Pakistan decided to develop the framework and policy to regularise housing societies (Webdesk, 2021). On the provincial level, the Government of Punjab has promulgated an ordinance, “The Punjab Commission on Irregular Housing Schemes Ordinance 2021”, to regularise irregular housing societies. The ordinance has established a commission to examine private housing schemes to sift out the irregular housing societies and impose penalties as prescribed by the law. Under the ordinance, the local government [or development authority] will support the commission for submitting bank records, layout plans and other relevant documents of housing schemes. The local government or the development authority can obtain the record from developers of the housing schemes (Butt, 2021).

Furthermore, the Rawalpindi Development Authority (RDA) is cracking down on illegal housing schemes due to the rising number of such schemes in the RDA jurisdiction. The Metropolitan Planning and Traffic Engineering (MP&TE) Directorate of RDA cracked down on eight illegal housing societies in their jurisdiction. RDA is also conducting awareness campaigns to educate the investors on the perils of illegal housing societies (The News International, 2021). Moreover, the regularisation of housing societies is substantial for several reasons. The acquisition of agricultural lands and green areas for housing societies has become a serious environmental and agricultural concern, with Agricultural being the largest sector of Pakistan’s economy. Additionally, encroachments and qabza are common land acquisition issues for housing societies. For example, several housing societies have encroached the communal lands or shamilat, creating more victims than beneficiaries.


Pakistan’s urbanisation crisis and the corresponding housing shortage can only be mitigated through proactive measures to develop affordable, low-income and high-end schemes. For ease of doing business, the procedures and timelines for approval of NOCs should be streamlined to promote the registration of housing schemes. Presently, it takes two to three (sometimes more) years for NOC approval. Moreover, the acquisition of shamilat and agricultural land is the result of the lacunas in the law, deemed to be exploited. A common example is getting NOC for a chunk of land adjacent to the shamilat and acquiring the shamilat as part of the project. Such societies are working under the garb of ‘registered societies. The Government of Pakistan is taking active measures to develop a proper framework for registering housing societies. Furthermore, RDA is conducting campaigns to educate investors about the differences between legal and illegal housing societies for safe investment. However, steps need to be taken to construct and develop low-income housing programs to mitigate the housing shortfall in Pakistan. The key considerations for Pakistan to combat the housing crisis should be economic stability, development of the regulatory framework, low-income vertical schemes and awareness campaigns.


Artaza, I. (2020, June 2). Urbanisation in Pakistan. UNDP. Retrieved from

 Approved / Un-Approved / Illegal Housing Societies. (2021). E-Khidmat Markaz Government of Punjab. Retrieved from

Butt, T. (2021, April 16). Punjab to regularise illegal housing schemes: sources. The News International. Retrieved from

Capital Development Authority. (2021, May 05). CDA. Retrieved from

Crackdown on eight illegal housing societies. (2021, September 24). The News International.

Hassan, L., Chaudhry, A., Jalil, H. (2021, September 7). Illegal Housing Societies in Islamabad PIDE Blog. Retrieved from

Hassan, L., Chaudhry, A.(2021). A traverse of illegalities in the private housing societies in Islamabad. PIDE Urban Monograph Series No. 5.  Retrieved from(

WebDesk (2021, December 15). Govt mulling regularisation of illegal housing societies. The News International. Retrieved from

Research Questions

Are housing societies a necessity or luxury in the context of Pakistan?

What are the steps taken by the Government to regulate housing societies?

What steps and documents are required to register housing societies?

Key Takeaways

Around 69% of housing societies in Pakistan are un-registered.

Pakistan needs affordable, low-income, vertical housing schemes and plans instead of the high-end housing schemes in posh localities

The process of registration of housing societies involves the submission of various documents, obtaining NOCs and Layout Plan.

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