Hidden Costs to Watch for When Leasing a Property in Pakistan

Finding the right properties for lease in Pakistan can feel like the first step toward a new chapter—whether it’s setting up a dream home, opening your first store, or expanding your business. But amidst the excitement, it’s easy to overlook the hidden costs that often come bundled with leases. These unexpected expenses can strain your budget and turn what seemed like a great deal into a financial burden. This article breaks down the often-missed costs, helping you make informed decisions that align with both your goals and your pocket.

Whether you're eyeing a flat in Lahore, an office space in Karachi, or a shop in Islamabad, understanding these hidden costs is crucial. With so many tenants focusing only on monthly rent, additional expenses can sneak up quickly. By gaining clarity on these aspects early on, you can plan better, negotiate smarter, and lease with confidence. Let's walk through the most common hidden charges that impact people leasing property across Pakistan.

Security Deposits and Advance Rent: The Upfront Pressure

Many first-time tenants are surprised by how much cash they need just to secure a lease. In Pakistan, it’s common practice for landlords to ask for two to six months of rent upfront—usually a combination of security deposit and advance rent. This can feel like a sudden financial punch, especially when you were only budgeting for your first month’s rent. For example, if the monthly rent of a commercial space is PKR 100,000, you might be asked to pay PKR 400,000 or more before you even move in.

What’s more, these deposits aren’t always returned easily—or at all. In some cases, tenants report landlords withholding part or all of the security deposit for minor repairs or cleaning charges, even when the property is handed back in good condition. To avoid this, make sure your lease agreement clearly outlines when and how the security deposit will be refunded, and take detailed photos of the property during handover. Also, ensure both parties sign off on a condition report to avoid disputes later. It’s a small step, but it can save you big money down the line.

Maintenance and Service Charges: What’s Really Included?

One of the most overlooked hidden costs when leasing property in Pakistan is maintenance and service charges. Especially in residential apartments or commercial plazas, tenants are often expected to pay for shared utilities—like cleaning, lift service, security, and generator fuel. These fees might not be included in the advertised rent, so you’ll need to ask upfront.

In posh areas like DHA or Bahria Town, these charges can run into the thousands monthly. And if you're leasing an apartment in a high-rise, make sure to check who covers the building's regular upkeep. Are there standby generators? Who pays for their fuel? These questions matter. Maintenance fees may fluctuate depending on the property’s usage and management policies, and if you’re not prepared, these extra bills can significantly inflate your monthly cost. Always request a breakdown of these fees in writing before finalising any lease.

Property Tax and Withholding Tax: Who Actually Pays?

While the property tax is officially the responsibility of the property owner, the reality on the ground in Pakistan often tells a different story. Some landlords, particularly in commercial leases, shift part or all of the property tax burden to tenants—either directly or hidden within the rent amount. Then there’s withholding tax, which is the tenant’s legal responsibility when the landlord is a filer with the Federal Board of Revenue (FBR).

Withholding tax can range from 5% to 15% of the monthly rent, depending on your and your landlord’s tax status. If you’re unaware of these tax implications, you may end up either non-compliant or paying penalties later. Before signing any contract, check the landlord’s tax status on the FBR Active Taxpayers List, and have your accountant or legal advisor review the lease terms. If the lease involves withholding tax, be sure to retain proof of deductions and file them properly. This step not only protects you legally but can also affect your future credit standing and tax returns.

Utilities Setup and Transfer Fees: A Hidden Hustle

In many Pakistani cities, getting basic utilities—like electricity, gas, and water—connected or transferred in your name can come with unexpected fees. While the property may be fully fitted with connections, new tenants often have to pay processing charges, deposits, or “facilitation” costs to staff or middlemen handling the setup. For commercial properties, these charges can multiply if multiple meters or higher loads are involved.

Also, if the property has been vacant or disconnected, you may need to pay arrears or reconnection fees. WAPDA, SNGPL, and other utility bodies require proper documentation and often move slowly without repeated follow-ups. Don’t assume the process will be automatic or free—budget time and funds to handle this transition. When leasing a property for business use, delays in utility connections can also mean delays in operations, which translates into lost revenue. Always ask the landlord for utility histories and current billing statements to ensure you're not inheriting someone else’s debt.

Brokerage and Legal Fees: Who’s Charging What?

In most parts of Pakistan, property agents charge a commission—typically equal to one month’s rent—when helping tenants secure a lease. This fee is often non-refundable and separate from any payments to the landlord. Some agents also charge both the tenant and the landlord, which doubles the overall brokerage cost. Make sure to clarify the commission structure before engaging an agent and get a proper receipt for your payment.

In addition to brokerage, legal documentation can add extra costs. If you hire a lawyer to review or draft your lease agreement (highly recommended), expect to pay a flat fee or an hourly rate. For commercial leases, legal fees might also include stamp duty or contract registration costs, depending on the city. In Karachi, for example, the Sindh Urban Immovable Property Tax and rent agreement registration with Excise Department might apply. These fees might feel small compared to the total lease, but they can quickly add up—especially when unexpected. Being prepared helps you avoid last-minute surprises.

Repair and Renovation Responsibilities: The Grey Zone

Who fixes what—and when? This is often a grey area in Pakistani leasing. Many landlords rent out properties “as-is” and expect the tenant to handle any minor repairs or upgrades. This can include things like repainting, fixing leaky faucets, or replacing worn-out fittings. While some agreements specify these terms, many remain vague, leaving tenants exposed to future disputes.

If you’re leasing a shop, office, or even a home that needs customization, renovation costs can escalate fast. You might need to fix the ceiling, install lighting, or even modify the layout to suit your business. In such cases, clarify in writing whether the landlord will offer a rent-free period or contribute to improvements. If not, make sure your investment makes sense for the length of your lease. Spending PKR 300,000 on renovations for a one-year lease rarely adds up. Always do a thorough site inspection and get quotes before committing to a property that looks like “a fixer-upper.”

Parking and Access Costs: A Convenience Premium

You might love the location, but what about parking? In congested urban areas like Lahore’s Gulberg or Islamabad’s Blue Area, parking space is a premium—and often not included in the rent. Commercial tenants may find that their shop or office is perfect except for customer access, which can directly impact foot traffic. Some plazas or apartment buildings charge extra for reserved parking spots, especially if the space is underground or gated.

There’s also the matter of access timing. Some buildings restrict access outside office hours, which can be a major issue for restaurants or call centres. If your lease doesn’t cover these fine details, you might find yourself paying separately for evening access, security, or extra lighting. These hidden costs are easy to overlook when you're focused on location and size, but they can affect the day-to-day usability and profitability of the space. Ask clear questions before leasing: Is parking included? Is access 24/7? If not, what are the alternatives?

Furnishing and Fit-Out Expenses: From Empty Shells to Livable Spaces

In Pakistan, most properties for lease—especially commercial spaces—come unfurnished. This means you’re responsible for furnishing, decorating, and in some cases, even finishing basic elements like flooring or ceiling work. These fit-out costs can be substantial. Even for residential units, landlords may only provide built-in wardrobes or kitchen cabinets. Everything else—from curtains to air conditioners—might be your responsibility.

If you're opening a salon, for example, setting up interiors can easily cost several lakhs. The same goes for corporate offices needing cubicles, networking equipment, and lighting. For homeowners, costs can rise due to inverter AC installations, geysers, and water filters. Always assess whether the space’s condition matches your vision, and how much it will cost to get there. If it’s not feasible, look for semi-furnished options or negotiate a lower rent to offset the expenses. Being realistic about these costs ensures you don’t overspend in your first few months when cash flow is often tightest.

Rent Increases and Hidden Clauses: The Long-Term Risk

One of the most financially painful surprises tenants face is unexpected rent hikes. In some Pakistani leases, especially informal or unregistered ones, landlords retain the right to increase rent after 11 months—even if the tenant has invested heavily in the property. This can force you into a tough choice: accept the higher rent or go through the stress and expense of relocating. Protect yourself by insisting on a written agreement with a clear clause about annual rent increases, typically capped at 5-10% per year under local tenancy laws.

Also, watch out for vague clauses that give the landlord excessive control or leave room for sudden eviction. Some leases state the landlord can reclaim the property with short notice if “needed for personal use.” Make sure your agreement provides fair notice terms, and consider registering your lease to gain legal protection. If you’re leasing commercial property, include clauses that outline renewal options, rent adjustment terms, and dispute resolution procedures. This level of detail isn’t about being cautious—it’s about being smart. It keeps your business or home stable and prevents unnecessary stress over the long run.

Final Thoughts: Clarity Leads to Confidence

Leasing a property in Pakistan—whether residential or commercial—should feel exciting, not overwhelming. The best way to protect yourself is to educate yourself about the hidden costs and be proactive in your lease negotiation. Knowing the total financial picture, not just the monthly rent, allows you to plan realistically and avoid falling into common traps.

Always work with reputable agents, ask clear questions, and get everything in writing. Whether you're browsing properties for lease in Karachi, Lahore, or Islamabad, your peace of mind starts with preparation. With this guide in hand, you’re now better equipped to lease smartly, confidently, and successfully—without any nasty surprises.