Due to the global economic crisis, property prices are decreasing worldwide. But in Pakistan, there is no sign of a decline in property prices due to malpractices in the real estate sector. A plot filing system increases the property’s price without being driven by demand, leading to money speculation. The filing system contains the holder’s name and is subject to procedural transfer, and dealers earn a huge amount of money in the name of transfer fees.
The open file system can be given to other people as whoever holds the file is the owner. Even if someone has stolen the file will become the owner of the property. This system increases doubts in the real estate sector as investors get nothing but scanty promises. As the property filing system is not recorded then, it induces overselling of files. The dealer sells imaginary files; for instance, the developers may sell 1,500 imaginary files against a piece of land that fits 1,000 plots. These oversold files were brought back into the record by issuing an affidavit.
Moreover, developers are exploiting people’s money by introducing the concept of adjustments, merging and buy-back. Additionally, reselling is another way that increases the price. The illegal plot filing is circulating in the economy and is now called legal tender money on which dealers are doing business and getting more money. The State Bank of Pakistan has remained silent on this illegal business. The development companies use clean note currency with a denomination of Rs 100 (affidavit) and no legal identity. This malpractice is considered the maltreatment of money, a punishable act according to the Pakistan Penal Code.
Under the plot filing system, the files are exchanged, and sellers get payments in cash. It boosts the circulation of unrecorded money in the economy and poses challenges, i.e., tax evasion and instigating faulty functioning of economic policies. The plot filing system must be controlled to stop the circulation of illegally recognised mediums of exchange. If it is not, it will become a balloon of the grey economy, which will keep inflating and bursting later. These irregularities are also increasing the development of illegal housing societies.
To control the malpractices of the plot filing system, the government and institutions must play a proactive role. Moreover, SBP can act against increasing money malfunction due to illegal currency binding. Government has to disseminate awareness about legal and illegal plot filing systems. Nonetheless, The Competition Commission of Pakistan could play its part in exercising the powers mentioned in the Competition Act 2010 to mitigate malpractices in a plot filing system.
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