Food and shelter are the most inescapable basic human needs and owning a home is the dream of every individual and family. States with a welfare creed and agenda strive to ensure that all people living within their territorial limits are provided some form of shelter or a home that adheres to their needs and range of affordability.
The issue of housing has economic, social and political dimensions for both the families that own a house and for governments pursuing this strategic goal. For political parties vying for political power by winning the franchise of the people, housing is invariably an important issue and a great catalyst for their electoral victories.
No wonder Zulfikar Ali Bhutto’s slogan of ‘roti, kapra aur makan’ proved to be an enduring vision and his party almost sidelined all the bigwigs of the political arena at the time. It is, however, another matter that the party could not fulfil this pledge. Nevertheless, the fact remains that the ‘Bhutto factor’ still plays a significant role in Pakistani politics.
The PTI’s rise to power can possibly be attributed, among other things, to its manifesto that promised 10 million jobs and five million housing units for lower and lower-middle income groups by playing the role of a enabler and facilitator. Pakistan faces an overall backlog of 11.2 million housing units, with a shortage of four million and between seven million and eight million in the urban and rural belts of the country.
Building five million houses over the next five years, which constitutes almost half of the total shortage of the housing units, is arguably a difficult task. To accomplish this herculean undertaking, the government will have to work with unruffled commitment with the support of all the relevant stakeholders, including banks, developers and allied industries, by creating adequate incentives for them to participate in the effort. This also involves enhancing the mortgage debt-to-GDP ratio through effective fiscal measures.
It is also important to ensure that mortgage installments that are to be paid by prospective aspirants are financially feasible and affordable for them.
Owning a house for an individual and a family means an investment whose value keeps increasing, which helps to create the buying and reinvestment power known as equity. Home ownership also stabilises other home-related expenses like utilities and gives the owner more control over his ability to make investments in his property that keep those expenses down. It helps to create a sustainable future in many different ways.
A long-term plan significantly reduces living expenses as they move towards a retirement budget. Staying in one’s own home instead of a rented accommodation allows financial and emotional investment in the owned living space and community. Staying put for longer periods of time also creates social benefits that range from friendships with neighbours to community involvement and consistent educational opportunities for children. In some societies, it also means social recognition and prestige.
The PTI government, particularly the prime minister, has taken great interest in getting the scheme rolling and chaired at least 10 meetings since it assumed power to finalise its contours and other related concerns. The scheme has already been formally launched by him and the public has shown tremendous interest in it.
The number of people who have applied to avail the opportunity to own a house reportedly runs into the millions. The Taskforce on Housing held its first meeting on November 5 and Zaigham Rizvi, the chairman of the taskforce, addressing a joint press conference along with Punjab’s housing minister Federal Minister of State for Housing Mehmoodur Rasheed, and MPA Firdous Shamim Naqvi revealed that the total estimated financing requirements for building five million houses stood at around Rs16 trillion.
Out of the total cost of Rs16 trillion, 20 percent will be borne by the home owner while the remaining 80 percent will be provided by borrowing from the bank. They said that the institutional framework will be put in place in the next 90 days as the bill for the establishment of a housing authority will have to be passed by the provincial assemblies of Punjab, Khyber Pakhtunkhwa and Balochistan. In addition, they said that Sindh plans to unveil its own housing scheme at the provincial level.
After its deliberation, the taskforce has also made specific recommendations for the successful implementation of the scheme. These include adopting a rent-equalisation model; charging a 10 percent mark-up on bank loans of two million payable over a period of 20 years, with a monthly installment of Rs18,564; asking banks to increase the limit for housing finance up to five percent of the total loan portfolio; and reducing the tax burden on banks on the portfolio allocated for housing finance and an increase in the capital adequacy ratio for banks. The chairman revealed that one million houses will be built in the first year and the government will ensure competitive bidding for the selection of builders in a transparent manner.
All this seems very encouraging and indicates the seriousness and commitment of the PTI government to implement this flagship project. Only time will reveal what the final outcome will be. But the initial steps appear to be quite auspicious. The successful implementation of the envisioned scheme will unleash considerable economic activity in the country that will not only strengthen the building industry, but will also foster the emergence of industries and create thousands of jobs.
The multiplier effect of this huge investment will accrue infinite impetus to the economy as a whole. However, this will depend on the timely implementation of the scheme, the ability of the government to raise the required finances, and the resolution of all the related issues, including finding land with clear entitlements to avoid unnecessary litigation.
The writer is a freelance contributor. Email: ashpak10gmail.com