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The housing promise


July 17, 2019

Prime Minister Imran Khan launched the second phase of registration for the Naya Pakistan Housing Programme to provide affordable housing facility to the low-income segments of the country. Addressing the ceremony, he said “The objective of countrywide registration process by the Pakistan Housing and Development Authority is to collect data of public demand for housing across the country and launch projects in accordance...”

Since the launch of the first phase on October 18, more than 500,000 people have already applied. The prime minister also inaugurated a web portal to facilitate the applicants to apply from their homes besides the registration work being handled by 7500 Nadra e-Sahulat facilities across the country. The government, he revealed, is also bringing an ordinance to enable commercial banks to extend loan facility to the poor, who cannot afford to buy a house.

Owning a house for an individual and a family means an investment whose value keeps increasing, which helps create the buying and reinvestment power known as equity. Home ownership also stabilizes other home-related expenses like utilities and gives the owner more control over his/her ability to make investments in property which keep those expenses down. It helps create a sustainable future in many different ways and 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.

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 the people living within their territorial limits are provided with some kind of shelter called a home according to their needs and range of affordability. The issue of housing has economic, social and political dimensions both for the families owning the house and for the government pursuing this strategic goal. For political parties vying with each other for political power by winning the franchise of the people, housing invariably is an important issue and a great catalyst to their electoral victories. No wonder Bhutto’s slogan of ‘Roti, Kapra aur Makan’ proved to be an infectious vision and his party almost annihilated all the big wigs of the political arena. It is another matter that the party could not fulfill that pledge but the fact remains that the Bhutto factor still plays a significant role in Pakistani politics.

The PTI’s rise to power owes, among other things, to a great extent to its manifesto promising 10 million jobs and five million housing units for the lower and lower-middle income groups by playing a role of enabler and facilitator. Pakistan faces an overall backlog of 11.2 million housing units with a shortage of four million and 7-8 million in the urban and rural areas of the country. Building five million houses over the next five years is surely a big ask. To accomplish this herculean undertaking, the government would have to work with unruffled commitment with the support of all the stakeholders including banks, developers and allied industries by creating adequate incentives for them to participate in the effort which also involves enhancing the mortgage debt-to-GDP ratio through effective fiscal measures. It is also important to ensure that the mortgage installments to be paid by the prospective aspirants are financially feasible and affordable for them.

The PTI government, particularly the prime minister, has taken great interest in getting the scheme rolling and chaired several meetings since coming into power to finalize its contours and other related issues. It is beyond doubt that the public has shown tremendous interest in the scheme. According to the task force on five million housing units, the total estimated financing requirements for building five million houses stands at around Rs16 trillion. Out of the total cost of Rs16 trillion, 20 percent will be borne by the house owner while the remaining 80 percent will be provided through bank borrowings.

The task force also made certain recommendations for successful implementation of the scheme, including: adoption of a rent equalization model; charging 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 limit for housing finance up to five percent of total loan portfolio and reduction of tax burden on banks on the portfolio allocated for housing finance and increase in capital adequacy ratio for banks. Hopefully, the proposed legislation will take care of all these issues.

It all seems very encouraging and indicates the commitment of the government to implement this flagship project. Only time will reveal the final outcome but the beginning is quite auspicious. The successful implementation of the scheme as envisioned will unleash huge economic activity in the country which will not only reinforce the building industry but also help in the emergence of down-the-stream industries besides creation of thousands of jobs. The multiplier effect of this huge investment will accrue infinite impetus to the economy as a whole. This will, however, depend on 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 lands with clear entitlement to avoid unnecessary litigation.

The writer is a freelance contributor. Email: [email protected]

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