Things to consider before purchasing a property in Karachi

Sindh Building Control Authority (SBCA) is a regulatory and supervisory body in the province of Sindh, Pakistan to ensure that the approval of building plans and NOCs, etc. are in conformation with the existing Building & Town Planning Regulations. The government of Sindh notified extension of the jurisdiction of Karachi Building Control Authority to the whole of Sindh and renaming the Karachi Building Control Authority to Sindh Building Control Authority on February 14, 2011. The five Regions of Sindh Building Control Authority notified by the Government of Sindh are Karachi, Hyderabad, Mirpurkhas, Sukkur & Larkana, having the Head Quarter Karachi.

SBCA regulates Town Planning and Building Control per Master Plan and Environmental Control (Building & Town Planning) Regulations, given legal cover under Sindh Building Control Ordinance, 1979. It also issues licenses to professionals, builders, and developers under Karachi Building & Town Planning Regulations 2002.

On September 08, 2019, SBCA published an advertisement in the Dawn newspaper. The advertisement warned about illegal construction in the province of Sindh. The warning is regarding illegal construction, sales and purchase of unauthorized upper floors, construction of multi-units, and commercial activities on residential plots. The authority mentioned section 19(1) of the Sindh Building Control Ordinance that is stated below:

Whoever contravenes any provision of this Ordinance, shall be punished with simple imprisonment for a term not exceeding two years or with fine not less than twenty thousand rupees or with both and if the offence is a continuing one, further fine not exceeding five hundred rupees for each day after the date of the first commission of the offence.

In the advertisement, however, the penalty has been mentioned as 3 years imprisonment or a fine of Rs. 50 thousand or both. The four areas of consideration mentioned in the advertisement include Warning, Registration of Property, Provision of Utility Services, and Discontinuation of Facilities. These have been reproduced below for the awareness of the people interested in buying property in Karachi.

1. Warning

Construction without approved building plan or violation of approved plan not only become a reason for demolition/sealing of such construction but strict legal action will also be taken against those who are found involved in sale and purchase of illegal buildings.

2. Registration of Property

As per orders of the Honorable High Court and Building Regulations, before issuing lease/sub-lease, sale deed etc of any building or unit all registrars, sub-registrars have to verify SBCA approved Completion Plan of the said unit.

3. Provision of Utility Services

As per orders of the High Court and SBCO-1979 Section 06, organizations that provide utility facilities like electricity, water, gas, and sewerage are instructed that they should not provide such facilities in any building without verification of SBCA approved completion plan.

4. Discontinuation of Facilities

K-Electric, Karachi Water and Sewerage Board, Sui Southern Gas Company or other Semi-Government organizations may discontinue utility services and connections for any building or place on a written complaint from SBCA.

5. Other considerations

You should also check the Federal Board of Revenue (FBR) rates for property valuation. FBR announced new valuation tables for taxation of property in July 2019. The new rates are applicable from July 24, 2019. After this revision, the property valuation rates are approximately 85% of the fair market value, It means that you will have to pay higher taxes during the transaction of property acquisition. Read my post on FBR Rates for Property Valuation.
In Karachi, you can buy a flat with a lease, and you can also get a flat through society transfer. In the case of society transfer, you are not the leaseholder. Instead, you get a transfer letter by the society under your name. However, the benefit, in this case, is that you are relieved from paying heavy tax amounts during the flat transfer process. You only have to pay the transfer fees in society.
Due to the shortage of water resources in Karachi, some of the new apartments do not receive sufficient supply of water from Karachi Water and Sewerage Board. In these cases, they obtain water from indigenously designed boring facilities. Boring water is salty and has various health implications. So, you should confirm the ample supply of water from the main supply line.
SBCA introduced Automated Single Window Facility for submission of building plans with effect from September 21, 2019. Building plans are submitted by Housing Societies / Development Authorities / Land Owning Agencies / Lessor of Plots through licensed professionals (Architects and Engineers). After October 31, 2019, no proposal will be accepted if the professionals are not registered at the SBCA portal. Without registration, no professional will be eligible to submit building plans.
A builder requires 4 NOCs from SBCA to initiate a project. The first is Town Planning NOC. The second is Architectural Concept Plan. The third is Structure NOC. After Structure NOC, the builder gets final approval for construction. For bookings, the builder requires Design NOC. After getting Design NOC, the builder is allowed to post advertisement of the project.
There is a representative organization of builders and developers known as Association of Builders And Developers of Pakistan (ABAD). The organization has around 1100 members. If you purchase the property from a member builder of ABAD, it means you are dealing with a registered builder. All record of that builder is available to the concerned departments and institutions.
A critical factor in the case of Karachi is that of land ownership. There are different authorities that have ownership of certain parts of Karachi. They include Karachi Metropolitan Corporation (KMC), Karachi Development Authority (KDA), Cantonment Board, Malir Development Authority (MDA), and Lyari Development Authority (LDA). Hence, while purchasing the property, you should be aware of the relevant jurisdiction.
The Government of Pakistan has introduced a new clause in Income Tax Ordinance 2001. According to this clause, the income of a person will not be categorized under Section 111 ‘Unexplained income or assets’ if the purchase of a property is from a registered project, and buyer is the first purchaser of the building, and purchase is made before 30 September 2022. This exemption is mentioned under section 100D.