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Renting a house? Know the law

A lack of formalised rental agreements in Pakistan often result in disputes between landlords and tenants

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PUBLISHED August 21, 2022

When Arsalan Siddiqui was born his parents shifted to another house nearby their first home in Liaquatabad, putting the first property on the market for rent so they could earn extra income from it. Siddiqui’s father decided to rent it to a childhood acquaintance and his family, six people in total. Because he knew the tenant and had lived in the same area as him for his entire life, Siddiqui’s dad made a deal without a formal rental agreement.

For the fest few months, Siddiqui said the family used to pay the rent on time with no issues. But after some time, they started making payments later and later – sometimes going for six months without paying rent. “My father didn’t bother much as we knew they were struggling financially,” he said. Still, the tenant was able to buy his own car, even as he missed and delayed payments. Four or five years into this cycle, Siddiqui’s father finally asked the tenant to leave.

As people in Pakistani have tried to improve their livelihoods over time, many have turned to buying property as lifetime investments that will allow them to retire at a reasonable age. But are the tenant laws in our country good enough to protect the rights of both landlord and tenant?

Renting informally

Since Siddiqui’s family didn’t go through a formal rental process with their tenants, they weren’t protected by law at all. Their tenant refused to leave the property, saying that if he has been living there for 25 years, he can prove that he owns it. “[Me] and my brother were schools going at that time, and we didn’t know much about laws or anything,” Siddiqui said. “My father was a simple man, and our tenant had some links to a political party,” he added.

Siddique said this political intimidation scared his father into compliance, and he allowed the tenant to keep living at the property as long as he paid rent. The amount he paid was very little, around 1,500 rupees, which was half the amount of what other landlords on the same street were charging. But Siddiqui said his father kept mum because he feared for his family’s security.

After some time, one of Siddiqui’s uncles visited the family from Islamabad and got to know about the situation. He wanted to involve police and lawyers, telling the political party of the tenant that he was misusing their name to illegal reside on someone else’s property. However, Siddiqui’s father didn’t have the original papers for the property or a tenant agreement to show in court. “There was no paperwork regarding the rent and the property, so our case was pretty weak,” Siddique said.

After almost a year fighting the case in court, the judge told the tenant to leave the property. But if he did so, Siddiqui’s father was required to pay him 300,000 and waive off the unpaid rent that he still owed. “It was a nightmare for all of us as the tenant had guns in his house and we used to fear that he might harm us,” Siddiqui said.

When the tenants left, they broke all the windows and doors in the house so that Siddiqui’s family had to get them changed before selling the property or renting it to someone else.

What the law says

Atique Niazi, an advocate who handles rental cases in court, said that even though The Sind Rented Premises Ordinance 1979 gives rights to both landlords and tenants, the courts rule in favor of the landlord 90 percent of the time. “The decision is in favor of the landlord because he owns the property, and no one can force him to rent his place to anyone he has a conflict with,” Niazi said. However, in cases where tenants have stronger cases, landlords are asked to pay a settlement.

Niazi said most rental agreements between parties last for around 11 months. There are also agreements that last for three years or more, which are called lease agreements. These lease agreements are done officially by a registrar while normal 1-year rental agreements can be done on normal stamp paper. “If both the parties think they can carry forward the agreement they can renew it mutually, or else the tenant has to evacuate the property,” he said. Clause two about tenant rights in the ordinance specifies that the landlord has to give the tenant a notice period of one month before asking them to leave.

Another advocate, Javed Ali, said the rental system mostly favors the landlord. He said most conflicts occur when landlords increase rent for their tenants or ask them to pay extra bills. But most tenants don’t want to take their cases to court, they usually just leave and find somewhere else to live. “The land belongs to the landlord and that cannot be changed no matter how wrong he has been [acting towards] the tenant,” explained Ali.

The courts make judgments in accordance with SRP 1979, but the conditions may vary since cases are heard by a senior civil judge who is akin to a rent controller. “The case when filed it scrutinized [to] see what police station jurisdiction it falls in and similarly the rent controller will look after the case,” Ali said.

Wasted time and money

Around six years ago Muhammad Shakeel, 50, thought to open a few businesses on the ground floor of his house, which is located on the main road. With the help of his relatives, Shakeel got commercial certificates with permission to use electricity. The first tenant that approached him about renting his space wanted to open a car wash service. Shakeel agreed on the basis that any the tenant would bear any expenses incurred in the construction of the shop himself.

After two years and several complaints from neighbors about the car wash causing traffic and water issues, Shakeel asked the tenant to leave since the agreement they had made had been for one year and hadn’t been renewed. In response, the tenant told Shakeel he would have to pay him back the one million rupees he had spent to build the shop. Only after that, would he agree to leave.

“It was a shock for me that why would I pay one million rupees for the shop which is already my property,” Shakeel said. He tried to do whatever he could to get the tenant to leave but the tenant decided to take the case to court, demanding Shakeel pay him one million rupees for his investment, even though it was on Shakeel’s property. After more than a year in court, the judge finally ruled in Shakeel’s favor since the business was on his property, and since the amount the tenant was requesting was never stipulated in writing.

Shakeel said he felt bad about asking the tenant to leave after he had just established the business, but he didn’t think the way his tenant responded to his remand was proper either. While the case was in court, Shakeel said he couldn’t earn rent from the space. His former tenant couldn’t earn anything during this time either.

For him, the lesson was to make the rental agreement formal from the beginning. “I didn’t put this condition in the agreement papers which was my only mistake,” Shakeel said.