PM’s Housing Programme: Low-income groups to get cross subsidy on house purchase

[Naveed Yaseen]

By Sajid Chaudhry

ISLAMABAD: The Financial Strategy developed for the implementation of Prime Minister’s Housing Programme aims at providing cross subsidy to the low-income groups on purchase of constructed units.

According to a latest official document available with Daily Times, for availability of required financing, long-terms loans from World Bank, Asian Development Bank and Islamic Development Bank would be negotiated. Floating of Housing Bonds through National Saving Organisation is also under consideration. The government is also considering providing long-term housing loans with increase in pay back period from 20 years to 30 years. Financing through banks and Development Financial Institutions (DFIs) at affordable rates would also be ensured for general public, Pension and Insurance Funds (EOBI, Benevolent and Pension Funds) to be used in schemes for government employees.

The government would also promote mortgaged backed instruments like Term Finance Certificates (TFCs), Real Estate Investment Trust for commercial and profit-oriented housing schemes.

Possible funding sources are joint ventures, workers welfare fund, foreign investment, insurance fund, House Building Finance Corporation, seed money by the government, general provident fund, financing by commercial banks and benevolent fund.

The main focus of the Prime Minister’s Housing Programme’s Operational Strategy is to provide housing to poor and needy people of Pakistan at affordable cost through mortgage financing or easy installments fiscal plan.

A Land Bank is being created for making available 72,260 acres of land in federal capital and all four provinces as well as Azad Jammu and Kashmir and Northern Areas for the construction of one million housing units under Prime Minister’s Housing Programme. To ensure the availability of required land for Land Bank the government would also take measures for retrieval, recovery of encroached lands. Some 5000 units would be constructed under short-term target with 1000 in federal capital and 1000 each in all four provincial capitals—Lahore, Karachi, Peshawar and Quetta.

The long-term targets fixed under Prime Minister’s Housing Programme included construction of 440,000 units in Punjab, 300,000 units in Sindh, 150,000 in NWFP, 40,000 in Balochistan, 40,000 units in Azad Jammu and Kashmir and Northern Areas and 25,000 units in Islamabad.

The country faces a shortfall of 7.9 million housing units across the country and annual demand is estimated at 0.85 million units with annual production at 0.35 million leaving annual shortfall of 0.50 million housing units.

At present total housing units have been estimated at 22.8 million including 67.5 percent in rural areas and 32.5 percent in urban centers of the country with present household size at 3.13 person per room in the country.

To facilitate the quick construction, the role of the government has been explained as roviders of incentives to local and foreign investors, setting minimum quality and design guidelines, multi-model housing commensurate with cultural values and eco-system and linking construction of housing facilities with financial markets.

http://www.dailytimes.com.pk/default.asp...2009_pg5_5