property buying and selling laws in pakistan al sadat marketing

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Property Buying and Selling Laws in Pakistan 2023

Property purchases are among the most reliable and profitable investments in Pakistan, and for good reason. With an estimated $1.5 trillion in value, real estate is one of the fastest-growing businesses in the nation. Furthermore, it boosts the GDP by almost 3%. However, many homebuyers are unaware of Pakistan’s property rules despite the vast potential and promising future of the heavily invested sector.

Both people and organizations must follow the regulations that govern the purchasing and selling of real estate in Pakistan while engaging in any transactions. Let’s quickly go over the definition of property and what it entails before we get into various laws and regulations.

You have probably heard the words “land” and “property” used interchangeably. Although it might make sense in some circumstances, it is typically not a good idea to use both terms synonymously. This is partly because property and land have separate legal definitions.

Property is defined as any “tangible or intangible asset that can be possessed or vested in an individual,” according to UN-Guide Habitat’s on Land and Property Rights in Pakistan. The phrase “tangible” refers to property that is physically present, such as land, while the term “intangible” refers to intellectual property and patents that are not physically present.

Pakistani real estate is further classified into the following two groups:

Moveable Property

It speaks about items that can be transferred physically from one location to another. For instance, your car, jewelry, money, stocks, and other valuable items are all examples of transportable property. Crops, trees, grass, and fruits that have grown or are now growing on a plot of land are all considered to fall under this category in Pakistan.

Immovable Property 

It primarily relates to real estate, which includes land, homes, condos, offices, farms, and more. The same applies to wells and rights of ways, as well as all buildings attached to or incorporated with the land.

Property laws in Pakistan 

In Pakistan, the purchase and selling of real estate is governed by four key laws.

Registration Act 1908 

The Registration Act of 1908 governs the filing of immovable property-related documents with the registrar of assurances. Before making a purchase, it enables potential purchasers to look up the registration information for a home or business property. The fifteen sections of this regulation provide a thorough explanation of all the instructions required for the registration of properties. 

Simply expressed, the Registration Act of 1908 is a comprehensive regulation that provides clear guidance to both buyers and sellers regarding all aspects of real estate registration in Pakistan.Please take note that, with a few minor exceptions, this law has been adopted by all provinces.

The legislation also specifies the locations where properties may be registered, the times at which documents must be presented, and the locations at which they must be presented.

Stamp Act 1899 

The Stamp Act, which was passed by the British-Indian government in 1899, outlines and controls the items that can be subject to duty. Due to the fact that it directly affects government revenue, the act is still in effect in Pakistan. The many stamps used to buy and sell real estate in Pakistan are described in depth.

Buyers and sellers are required by the Stamp Act of 1899 to pay the government a specific fee in lieu of the stamp papers used to formalize real estate agreements. Although the influence of inflation and federal or provincial legislation may cause changes in stamp pricing, the overarching regulation urges people to use stamps to legally legitimize their real estate investment and sale.

Land Revenue Act 1967 

Each province is also given its own set of laws to control the records of property rights and modifications under the Land Revenue Act of 1967. It also outlines the whole organization and hierarchy of Pakistan’s land and revenue department.

One of Pakistan’s most significant property regulations, the regulation covers the numerous authorities granted to the various land and revenue department agencies as well as their proper domains. It explains how to collect land taxes and addresses important topics such conducting surveys, delineating boundaries, dividing property, and arbitrating disputes.

Transfer Property Act 1882

The Transfer of Property Act 1882 addresses how property is transferred in Pakistan, as the name suggests. As a result, this regulation directly affects the country’s real estate transactions.

Additionally, it prevents people and other entities from giving away real estate to someone else if they are not legally permitted to, protecting the buyer from suffering losses on contested parcels of land, businesses, or houses. The Transfer of Property Act of 1882 further clarifies who is qualified to transfer a property, how a transfer operates, whether a transfer is made orally, and the kinds of properties that are transferable.

Rights and Duties Of Seller

There are certain rights and duties of sellers. Some of these are as follows:

Duties of Seller Before Sale 

  • The seller is required to inform the buyer of any significant flaws in the property that they are not already aware of and are not readily apparent.
  • If the buyer requests any documentation that the seller is in possession of or has the authority to produce, the seller is required to do so.
  • The seller has an obligation to respond to all inquiries from the buyer regarding the property to the best of his knowledge.
  • Up to the day of sale, the seller is obligated to pay all fees, rent, obligations, and taxes.
  • Between the signing of the contract of sale and the delivery of the property, the seller is required to treat the real estate and any related title documents in his possession with the same degree of care as a prudent owner would.

Duties of Seller After Sale 

  • The seller must transfer ownership to the buyer after the sale is complete. When requested, the seller is obligated to transfer ownership of the property to the buyer or another person at his direction.
  • The seller and the buyer will be regarded to have entered into a contract stating that the seller has the authority to transfer the interest that he claims to be transferring to the buyer and that it exists.
  • Seller is required to give the buyer all title documents to the property that are in the seller’s possession or control when the buyer has fully paid the purchase price.

Rights and Duties of Buyer 

There are certain rights and duties of buyers too. Some of these are as follows:

Duties of Buyer Before Sale 

  • Any truth about the type or scope of the seller’s interest in the property that the buyer is aware of but has reason to think the seller is unaware of and which materially raises the value of such interest must be disclosed to the seller.
  • The price of a property must be paid by the buyer to the seller.

Duties of Buyer after Sale 

  • Where ownership of the property has transferred to the buyer, the buyer is obligated to cover any loss resulting from the destruction, harm, or decline in value of the property that was not caused by the seller.
  • The purchaser is responsible for covering any expenses, such as rent, taxes, or government fees.

Buyer’s Rights Before Sale

  • A charge on the property for the purchase money properly paid by him in anticipation, not the delivery.
  • On such purchasing money, interest.
  • The earnest money and other expenses that would be awarded to him in a lawsuit to force particular execution of the contract or to get a decision for its recession in the event that he legitimately declines to take delivery.

Buyer’s Rights After Sale 

The buyer is eligible to benefit from any property appreciation or value growth, as well as from the property’s rents and profits.

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