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Jun 16, 2006

Pakistan landlord tenant relations


Pakistan’s Landlord & Tenant law is based upon justice and fair play. It appears to lean towards the tenant, but in reality, does not do so.There are four main laws dealing with rent restriction, which cover the following areas of Pakistan.

  1. Islamabad Capital Territory
  2. Punjab/North West Frontier Province (NWFP)/Baluchistan
  3. Sindh.
  4. Cantonment areas.

Can landlord and tenant freely agree rents in Pakistan?

In Islamabad Capital Territory rents can be freely agreed between landlord and tenant. The rental agreement must be registered with the Rent Controller within a week of signing the agreement. The rent of a building is automatically increased at the end of every three years of the tenancy by 25% of the rent already being paid by the tenant, unless the landlord and tenant agree to increase the rent by an agreement in writing.

In the five other areas of Pakistan covered by distinctive provincial legislation, the Rent Controller is empowered to fix a fair rent, on application by the tenant or landlord.

These five other areas are

  1. Punjab,
  2. NWFP,
  3. Baluchistan,
  4. Sindh and
  5. Cantonment areas.

The following factors are considered in deciding on a fair rent:

  • The rent of the same building or similar accommodation in the locality at the time, and during the 12 months prior to the application;
  • The rise in the cost of construction, repairing charges, and taxes;
  • The rental value of the building in the Property Tax Assessment Register of the Taxation Department (or the assessment list of the Cantonment Board) in the Cantonment areas.

In the Cantonment areas, and in Punjab/NWFP/Baluchistan, if the fair rent exceeds the rent being paid by the tenant on the date of filing the application, the maximum rent increase is 25%.

In Sindh, where a fair rent has been fixed, no increase may be affected for three years. In any event, the increase in rent may not exceed 10% per annum on the existing rent.

In Islamabad Capital Territory and the Cantonment areas, if the rent has been determined by agreement between the landlord and tenant, no further increase is permissible during the tenancy if it is less than three years, except where some addition alteration or improvement has been carried out at the landlord’s expense and at the request of the tenant. The rent so increased may not exceed the fair rent payable for a similar building or rented land in the same locality, and is not chargeable until the improvement or alteration has been completed.

What rights do landlords and tenants have in Pakistan, especially as to duration of contract, and eviction?

In Islamabad no tenancy shall be valid beyond such period as the landlord and tenant may fix, by mutual agreement, before or after the commencement of the tenancy. If no period is fixed, the tenancy shall not be valid after six months from the date of receipt by the tenant from the landlord of a notice in writing terminating the tenancy.

In Islamabad Capital Territory and the Punjab, NWFP and Baluchistan the tenancy may be brought to an end:

  • Where the landlord has died
  • Or is a salaried employee and has retired or is due to retire or has proceeded or is due to proceed on leave preparatory to retirement within a period of six months or the widow or minor of the deceased landlord, as the case may be.

A tenancy may also be brought to an end in these areas:

  • Where the tenant has not paid rent within fifteen days of the time fixed in the contract, or in the absence of any agreement in the contract, within sixty days from the period for which rent is payable;

Provided that where the application made by the landlord in Punjab and Baluchistan on the above ground involving default of one month only and the tenant on the first date of hearing admits his liability to pay the rent due from him the Controller shall, if he is satisfied that the tenant has not made any default on any previous occasion, direct the tenant to deposit all the rent due from him on or before a date not exceeding fifteen days to be fixed for the purpose, and upon such deposit being made he shall make an order rejecting the application. If such deposit is not made he shall make an order that the landlord be put into possession of the property without taking any further proceedings in the case.

Where the tenant has without the written consent of the landlord:

  • transferred his right under the lease or sublet the entire building or rented land or any portion thereof; or
  • used the building or rented land for purpose other than that for which it was leased or has infringed any conditions of the tenure on which the building or rented land is held by the landlord; or
  • The tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land; or
  • The tenant indulged in activities as are causing nuisance to the neighbours; or
  • Where the building is situated in a place other than a hill station, the tenant has ceased to occupy the building for a continues period of four months without reasonable cause. (not applicable in Islamabad).
  • The building or rented land is reasonably and in good faith required by the landlord for the re-construction or erection of a building or the landlord has obtained the necessary sanction for the said re-construction or erection from the authority;

The controller may give the tenant reasonable time to put the landlord in possession of the building or rented land, and may extend such time, but not to exceed four months (three months in Islamabad Capital Territory) in the aggregate.

In Sindh, slightly different rules apply. Here the tenancy may be brought to an end:

  • If the landlord is a widow or a minor whose both parents are dead
  • or a salaried employee due to retire within the next six months, or has retired, or is a person who is due to attain the age of sixty years within the next six months or has attained 60

He may inform the tenant in writing that he or she needs the building for personal use and require him to deliver vacant possession of the building within such time as may be specified in the notice, not being earlier than two months from the receipt thereof;

This provision will not apply where:

  • the landlord has rented out the building after he has retired or has attained the age of sixty years or, as the case may be, has become a widow or orphan, or
  • where he is in occupation of a building owned by him in any locality.

A tenancy may be also brought to an end, by application to the Controller, if:

  1. he tenant has failed to pay rent in respect of the premises in his possession within fifteen days after the expiry of the mutually agreed period, or in the absence of such agreement, within sixty days after the rent has become due (if the application made by the landlord is on the sole ground mentioned in this clause and the tenant on the first day of hearing admits his liability to pay the rent claimed from him, the Controller must, if he is satisfied that the tenant has not made such default on any previous occasion and the default is not exceeding six months, direct the tenant to pay all the rent claimed from him on or before the date to be fixed for the purpose and upon such payment, he shall reject the application)
  2. the tenant has, without the written consent of the landlord:
    • handed over the possession of the premises to some other person;
    • used the premises for the purpose other than that for which it was let out;
    • infringed the conditions on which the premises was let out;
  3. the tenant has committed such acts are likely to impair the material value or utility of the premises;
  4. the tenant has indulged in such activities as are causing nuisance to the neighbours;
  5. the premises is required by the landlord for reconstruction or erection of a new building at the site and landlord has obtained necessary sanction for such reconstruction or erection from the authority competent under any law for the time being in force to give such sanction (provided that where the landlord fails to demolish the building within six months of the taking over possession of the premises or, as the case may be, commence the erection of the new building within two years of the taking over the possession of the premises, the tenant will be entitled to be put back into possession);
  6. where the landlord constructs the building as aforesaid the tenant who was evicted from the old building may, before the completion of new building and its occupation by another person, apply to the Controller for an order directing that he be put in possession of such area in the new building as does not exceed the area of the old building of which he was in occupation and the Controller shall make an order accordingly in respect of the area applied for or such smaller area, as considering the location and type of the new building and the needs of the tenant, he deem just and on payment of rent to be determined by him on the basis of rent of similar accommodation in the locality.
  7. the landlord requires the premises in good faith for his own occupation or use or for occupation or use for his spouse or any of his children.

In Cantonment areas the situation is again slightly different. Here a notice in writing may generally be given:

  • Where the landlord has died,
  • or is a salaried employee and has retired or is due to retire within a period of six months.

A landlord who seeks to evict his tenant shall apply to the Controller for an order in that behalf, and the Controller may, after giving the tenant a reasonable opportunity of showing cause against the application, make an order directing the tenant to put the landlord in possession, if he is satisfied that:

  1. the tenant has not paid or tendered the rent to the landlord within fifteen days of the expiry of the time fixed in the agreement of tenancy for payment of rent, or in the absence of such agreement, within sixty days following the period for which the rent in due; or
  2. the tenant has, without the written consent of the landlord,
    1. transferred his right under the lease or sublet the building or any portion thereof, or
    2. used the building for a purpose other than that for which it was leased; or
  3. The tenant has committed such acts as are likely to materially impair the value, look or utility of the building; or
  4. The acts and conduct of the tenant have been a nuisance to the occupiers of buildings in the neighbourhood; or
  5. Where the building is situated in a place other than a hill station, the tenant has ceased to occupy the building for a continuous period of four months without reasonable cause; or
  6. The landlord intends to demolish the building for constructing a new building on the same site and as already obtained the necessary sanction for such construction from the Cantonment Board:

The Controller may give the tenant a reasonable time for putting the landlord in possession of the building, and may extend such time so as not to exceed three months in the aggregate.

A landlord may also apply to the Controller for an eviction order of a tenant if he requires the premises in good faith for his own occupation or for his family members.

Where the tenancy is for a specified period agreed between the landlord and the tenant, the landlord shall not be entitled to apply before the expiry of such period for eviction of tenant to the Controller on the above grounds.

Deposits

Any amount of security deposit and rental deposit is legal, in all provinces and areas of Pakistan.

Legislation

The chief legal instrument is the constitution of 1973 (the “Constitution”). It establishes the relationship between the Federation and the four provinces. Legislative powers are distributed between the Federation and provinces by means of legislative lists. The Constitution contains the Federal Legislative List as well as the Concurrent Legislative List. Matters included in the Concurrent List are covered by Federal as well and Provincial Legislation. Matters not included in either of the two lists are within the exclusive domain of the provinces. However, no Provincial Statute may be drafted which is in conflict with a Federal Statute. The Concurrent List specifies property related matters and other civil claims as being within the legislative scope of provincial legislature.

There are four main laws dealing with rent restrictions. They are as follows:

  1. The Islamabad Rent Restriction Ordinance, 2001 (for the Federal Capital).
  2. The Punjab/NWFP/Baluchistan Rent Restriction Ordinance, 1959 (regulates tenancies in these three provinces)
  3. Sindh Rented Premises Ordinance, 1979 (regulates tenancies in this province)
  4. Cantonments Rent Restriction Act, 1963 (regulates tenancies in these areas, which are declared as cantonment areas by the Federal Government through notification in the official gazette and in which any part of the armed forces of Pakistan is quartered or where Defence installation or Defence production units are located or which, being in the vicinity of any such place or places, are required for the service of such forces)

Although the provisions of all these laws are for the most part similar, there are certain crucial differences.

EVICTION FOR NON-PAYMENT OF RENT

Duration until completion of service of process 60
Duration of trial 60
Duration of enforcement 245
Total Days to Evict Tenant 365
Courts: The Lex Mundi Project

How effective is the Pakistani legal system?

The legal system generally, and in relation to rent matters particularly, is very effective, if a little slow. The rights of the parties are strictly enforced and the rules are fairly consistently interpreted and applied.

Any rent agreement executed on yearly basis or for any term exceeding one year or reserving a yearly rent are registerable under section 17 of the Registration Act 1908. Failure to register invalidates the agreement.


Brief history: Recent changes in Pakistani landlord and tenant law

No new legislation, or amendment to the existing legislation, is anticipated in the near future nor has there been any recent radical de-regulation or re-regulation in this area.

Although the law may seem pro-tenant, and indeed although the preambles to these various legislations state: “it is expedient in the public interest to restrict the increase of rent of certain premises within (the specified) limits and the eviction of tenants there from,” in fact the courts have held that these laws are not only confined to their preamble object (to restrict increase of rent and the eviction of tenants), but are also aimed at protecting and regulating the interests of both tenants and landlords.

 




Comments

#1 REHAN | April 13, 2010

Does any body know that if your land lord is annoying you and not taking rent hence not giving you the rent receipts then is it possible to pay the rent in court if yes please guide about the procedure in detail thanks.

#2 ENGR GHULAM ABBAS CYCLEWALA | May 28, 2010

I think no legal document is valid by either LandLord or Tenant. As this is a formality of the law ,and law is blind, there is no justice, if what was agreed upon by both the parties was valid and acceptable then there would be no pending cases in the court. I think it is purely a trust ,and Allah is the sole judge, it takes a little long to resolve the case in Allah's court but one receives the justice.

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