Introduction

Illegal housing societies are a pervasive issue in different cities across Pakistan. According to government documents, 69% of all housing societies are unregistered. A total of 8,767 housing societies are present in the country, while 6000 remain un-registered with the concerned regulatory authority. In addition, over 4,000 cases have been filed against 500 of these societies at the cost of Rs 500 billion.

In Islamabad alone, the CDA has reported the presence of 140 illegal housing societies, occupying 90% of land in different zones. On the other hand, only 22 housing societies are approved by the CDA and hold a No-Objection-Certificate (NOC). Similarly, in other cities, thousands of illegal housing societies have been built without formal approvals from the respective authorities, which places a question mark on the legality and authenticity of Pakistan’s residential real estate sector.

Why Pakistan has so many illegal housing societies?

There are several reasons why these illegal housing societies have proliferated in the country despite the watchful eye of the municipal development authorities. One of the most important steps towards legalizing a construction project or a housing society is to acquire a NOC from the concerned development authorities. For instance, in the federal capital of Islamabad, a housing society must get a NOC from CDA after the basic layout plan for the housing society has been approved. This is followed by multiple intermediate steps, with the average time for NOC approval being two and a half years. Moreover, bureaucratic delays and other bottlenecks can push the timeline even further, which demotivates the sponsor or the developer from seeking a NOC.

What hinders the acquisition of an NOC?

Time and again, several government officials and legislators have raised their voices to streamline the approval process for construction and developmental projects. Recently, the Naya Pakistan Housing and Development Authority (NAPHDA) sent recommendations to the Prime Minister for reducing the time and cost of construction projects which includes the cumbersome process of acquiring a NOC. By the time a construction project acquires a NOC, the cost of the project has increased due to inflation. If the process of acquiring a NOC is reduced, it will not only reduce the construction cost but also improve Pakistan’s ranking on the Ease of Doing Business Index (EODB).

What is being done to ease the process of acquiring an NOC?

Considering the cost of illegal housing societies and the problems they entail; the Punjab government promulgated an ordinance to prevent the construction of illegal housing schemes in the province called “The Punjab Commission for Regularization of Irregular Housing Schemes Ordinance 2021”. The ordinance issues the creation of a commission that will look into the affairs of illegal housing societies.  It will regularize the projects developed on land set aside for forestry or agriculture. Under the ordinance, illegal housing societies include those residential projects that are built on green land and those without the approval of the relevant development authority. In addition, the ordinance has granted the commission the right to impose fines on non-conforming housing projects, deal with cases that are not being resolved under the established legislature, and call for land records from relevant government institutions. According to provincial government officials, if the commissions help the LDA reduce the time to issue a NOC, it will considerably reduce the time to complete the construction of housing societies in the province.

Conclusion

The incumbent government promised the creation of 5 million houses in 5 years and aims to carry out this ambitious goal through the Naya Pakistan Housing Program (NPHP). Currently, only a tiny portion of that promise has been completed. The process of acquiring a NOC from municipal development authorities is a drag and the government should actively try to reduce unnecessary steps that discourage sponsors from seeking legal permissions from the concerned authorities. This will ultimately help the government in dealing with the menace of illegal housing societies and help create an authentic residential real estate sector.