90 Percent Housing Societies Duck FIA Audit Ordered By Supreme Court

Posted on Posted inBE2C2

** Data from the FBR and industry surveys estimate that the country’s real estate sector is worth around $700 billion

** The sector has long been known as a major parking lot for black money

ISLAMABAD; Nov 4, 2018: Only 51 of the 631 cooperative housing societies operating in the country follow the law, a forensic audit of 452 of them by the Federal Investigation Agency (FIA) has revealed.

The country’s premier investigating agency in its report submitted to the Supreme Court said the housing societies have not cooperated with its Joint Investigation Teams (JITs) that sought record from them for audit purposes.

As a result, over 90 percent of the housing societies remain suspect, and therefore subject to further scrutiny, it has emerged.

Legal action has been recommended against rest of the societies by the National Accountability Bureau (NAB), the FIA and the Anti-Corruption Establishment (ACE) according to the nature of illegalities/irregularities determined during the audit,” says the report.

The report also revealed that out of 3,186 private housing schemes  registered across the country, 2,814 have been audited and only 248 have been found to be following the law– that’s 9 percent of the lot.

Legal action has been recommended against 90 percent of the private schemes.

The apex court has directed the FIA to complete the audit within one month. Later, notices will be issued to societies to respond and the court will evolve mechanism regarding their regularization and protection of public interest.

Related Article: Property Black Hole of Pakistan Economy

The real estate sector in the country has long been known for “land-grabbing”, speculative trading of properties and as a major parking lot for black money–it provides the single largest area of investment for tax-evaded and illicit wealth.

The amnesty scheme prior to the most recent one (this year) which offered yet another ‘one-time’ opportunity then to whiten assets parked in real estate yielded more than Rs300bn, according to a report early this year.

Since the housing sector provides maximum return on investment (ROI) in the country–supply lags demand by a very huge number, the sector is considered most lucrative part of the economy.

Data from the FBR and industry surveys estimate that the sector is worth around $700 billion, according to Dawn.

The World Bank in its 2017 report estimated that housing shortage in Pakistan is up to 10 million units and the deficit continues to grow, particularly in the urban areas.

The annual number of new adequate units built across the country covers less than half of the annual new demand which is growing at the rate of approx 700,000 units per annum.

By 2025, the shortfall is predicted to swell to 20 million residential units.

Experts say, the country’s real estate sector provides huge opportunities but challenges in regularizing it to acceptable level exist due to capability, capacity and transparency issues.

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