Do You Know Rental and Tenancy Law of Pakistan?


Do You Know Rental and Tenancy Law of Pakistan?

Pakistan real estate is the most viable investment sector when it comes to safety factor, investment growth and returns on investment (RoI). Majority of people tend to park their savings in rental properties in Pakistan in order to add a stable source of income to their income stream. Before buying a rental property, you must know much about Landlord and Tenant Law of Pakistan. The following article aims at giving information to the readers, potential tenants and landlord to see how the process works.

The Pakistan real estate Landlord and Tenant Law aims at providing a fair ground to both parties. In terms of rent restrictions, there are 4 main laws that deal with tenants and landlords' rights and cover all territories in Pakistan.

Landlords and Tenants are Free to Negotiate on Rent

Landlords and tenants are entitled by law to decide on the rent between them. Once they have done this, the landlords are bound to register this rental agreement with the local controller of rents within 7 days of them signing it. The law stated that rent increases are imposed automatically after every year of tenancy and the increase will be 10% or rent will increase after every 3 years of tenancy and the increase will be 25% of what the tenant is already paying. This rule does not apply if the tenant and landlord have already agreed on their own terms and have a written agreement stating this.

Rent Agreement

Tenancy agreement can be made for any period agreed between the parties. However, if such an agreement is for a year or exceeding one year, it must be registered under the Registration Act, 1908, section 17.

In order to prepare a valid rent agreement, keep the following pointers in view:

  • Complete contact details of landlord and tenant.
  • Description of the premises.
  • Period of tenancy.
  • Due date and mode of rent payment.
  • Rate of rent enhancement on per annum basis.
  • Purpose to rent out the premises.
  • Amount of total advanced rent payment & Security.
  • Bank account details, if rent is to be paid through bank.

Failure to register the agreement tenders them to be null and void.

After receiving an application from the tenant or the landlord, the rent controller has the power to set a fair rent.

What is Fair Rent?

When it comes to deciding on fair rent, there are several factors that one must take into consideration.

  • The current rent of the similar buildings in the immediate locality at that time during the year previous to the application being made.
  • The current cost of repairs, construction and taxes.
  • The rental value of the buildings can be decided as per the Property Tax Assessment Register of the Taxation Department.

Rights of Landlords and Tenants related to Contract Duration and Evictions

No tenancy is valid beyond the period of time that a landlord and his tenant have agreed upon, following the date on which tenancy actually began. If both parties have not agreed on a period, the tenancy will not be considered valid after 6 months of tenants receiving an evacuation letter from the landlord.

Eviction of Tenant from the given Premises

The law covers the rights of both parties. Under this Act, landlord can ask for tenant’s eviction in case:
  • Tenancy period has been expired.
  • Tenant has failed to pay rent.
  • Tenant has breached the tenancy agreement.
  • Tenant has used the premises for a purpose that is different purpose for which it was let out.
  • Tenant has infringed any of his tenancy conditions.
  • Tenant is found involved in the acts that will likely to damage the material value of the property.
  • Tenant has taken part in activities that can cause nuisance to the neighbours.
  • Landlord wants to acquire the property in order to carry out reconstruction or renovation.
  • Tenant has sub-let the property with landlord's permission.
Sub-letting is to re-transfer the rented premises to any other party without the consent of landlord.

The controller rent usually allows a reasonable time span to the tenant in which he can hand the property back to the landlord. He may extend this time span at his discretion but it will not exceed 4 months from the date, the decision was made.

Note: When a specified length of time has been agreed for a tenancy between both parties, the landlord cannot use the above-mentioned pointers a ground for an eviction and it must complete its duration.

Refund of Security

Pakistan real estate Landlord and Tenant Law seems to cover all aspects but there is no provision in the law for the tenant to file an application, in case landlord fails to refund the security. In this situation, a tenant will have to file a civil suit before the civil court.

This is all for now, but do let us know, if you need more information on the said topic. if you are interested to know more about laws governing Pakistan real estate sector or have any other query regarding realty sector email us at Subscribe to our newsletter and spare few minutes to check our Facebook page to stay updated about property market happenings across the country.

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