ISLAMABAD: In a bid to materialise the much-hyped dream of construction of 5 million housing units, the government has made three draft laws for establishment of Pakistan Housing Authority, placing regulatory regime for real estate and proposed changes to foreclosure laws enabling banks to move ahead with mortgage financing.
The government has decided to introduce a legislation to ensure the return of money from allottees under the Naya Pakistan Housing Project. A central depository company would also be established and a unified recovery system would be introduced. Publication of advertisements would be mandatory prior to attaching the property of defaulter. The defaulting party would have the right to challenge attachment of property within 45 days. Not civil but the high courts would be competent to hear appeals.
Talking to this reporter on Saturday, Firdous Shamim Naqvi, a member of Task Force on five million housing units, confirmed that three draft laws were ready for establishment of Pakistan Housing Authority, bringing real estate under the regulatory regime and making changes to foreclosure laws enabling banks to finance or the housing sector.
“These laws could be forwarded to the cabinet for final approval within next seven days,” he said, adding that the federal government could establish Pakistan Housing Authority (PHA) for the center so that the provinces could replicate this model to introduce provincial bills in respective assemblies for establishing their own housing authorities.
The wish to materialise this dream into a reality requires daunting work in whole five years tenure of the government because this desire cannot be fulfilled only with mere slogans and shallow promises.
After making desired changes to laws and placing enabling clauses for the banking sector to provide loans for housing, total financing requirement stood at Rs16 trillion only to meet the demand and at a time when the discount rate is rising and banks are dictating their own terms and conditions it is not yet known how much the government succeeds in achieving its desired goal on the housing front. Out of total cost of Rs16 trillion, 20 percent will be borne by the applicant/owner while remaining 80 percent will be provided through bank borrowings under the proposed financing model for construction of 5 million housing units.
However, housing experts said clear land entitlements and provision of financing were the major stumbling blocks to achieving the ambitious goal under the tenure of the PTI-led regime. The rent equalization model will be adopted for ensuring provision of low cost housing. Total housing requirement in the country stands at more than 10 million but the PTI is intended to construct 5 million in next five years. The Task Force on Housing recommended banks to increase limit for housing finance up to 5 percent of total loan portfolio after which the available financing would go up to Rs400 to Rs500 billion.
To promote mortgage financing in Pakistan and to improve laws and procedures relating to enforcement of mortgages, the suggested measures shall have to be taken including mortgage by deposit of title deeds and problems of clear titles and many other desired reforms in laws.
Mortgage by deposit of title deeds is the easiest, cost-free and hassle-free method for a financial institution for creation of mortgage over an immovable property. Until and unless the clear-cut law provisions are placed for recovery of loan money from borrower the housing finance cannot be promoted in the country.