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Low-income: Housing scheme remains a political statement
08-03-2015, 01:47 PM
Post: #1
Low-income: Housing scheme remains a political statement
The Ministry of Housing and Works has been unable to initiate a single housing project in compliance with the prime minister’s low income housing scheme, announced back in 2013.

The ministry alone is not responsible for this delay. According to officials, the finance ministry is reluctant to release initial funds worth Rs500 million for the purchase of land. Also, there is a dire need to amend certain laws to execute important development project.

The ministry, however, says they are working on their part. “We have identified potential land sites to develop housing units in Punjab, Khyber-Pakhtunkhwa (K-P) and Balochistan, and have forwarded the summary to concerned authorities over the release of funds to purchase land,” said Ministry of Housing and Works Senior Joint Secretary Akhtar Jan Wazir, while talking to The Express Tribune.

Soon after coming into power, the Pakistan Muslim League Nawaz (PML-N) government announced providing 0.5 million housing units for the low income group; 1000 colonies with 500 units each.

The scheme was named “Prime Minister’s low income housing scheme”, and was announced in the federal budget 2013-14; it also got appreciation not only from general public but from the private sector and its allied industries as well.

However, the delay in the project’s implementation is causing a lot of frustration among private sector stakeholders. “In Pakistan, such projects are more of a political statement.

It has been two years since the announcement and we have no update on the project,” said Constructors Association of Pakistan Chairman Arshad Dad.

Dad said it was equally important to explain what low-cost-housing actually constituted. “The construction of a unit might be affordable only by using local indigenous technology, but what about the cost of land?” he questioned.

“When the rate of a single brick is between Rs7-10, how can you say the construction would be low-cost?”

On the contrary, National Housing Authority Director General Mohammad Irfan was of the view that the perception of stagnant performance on the project was erroneous. “There are many issues which we have resolved in two years, including legislations, planning, design, house financing and builders’ guidelines without which the execution is such a mega project is not possible,” he explained.

“This is an ongoing project and will continue this way till requirements are not fulfilled,” he said, adding that they were taking land from provinces and not from private land owners, therefore the cost of land would not be very high.

Pakistan is facing a housing shortfall of nine million units, according to State Bank of Pakistan (SBP) statistics. The World Bank, in its 2009 report, said that Pakistan needed 0.34 million units annually to cater to the growing housing demand due to rapid urbanisation.

Mortgage financing in the country is only two percent of total finance sector, said the SBP.

“Private sector can play its role in constructing the units but it cannot finance the units to people, it is the job of banks and financial institutes to lend money but they are reluctant for this cluster financing,” Dad said.

However, Irfan said that government has set a lending rate of seven percent for financing. The total cost of these units will be in-between Rs1-1.2 million.

The allotter will pay seven percent financing for the period of 20 years and rest will be subsidised by government.

“We have almost restructured House Building Finance Corporation and secondary mortgage markets to facilitate and increase the trend of mortgage lending to people,” Irfan added.
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