ISLAMABAD: The Task Force on five million housing units in its maiden session on Monday estimated that total financing requirement for construction of housing stands at around Rs16 trillion during next five-year period.
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. On average 10 percent mark-up will be charged on bank loan of Rs2 million with repayment period of 20 years so monthly installment is worked out at Rs18,564 equivalent to existing rental levels, the member of Task Force on Housing MPA Firdous Shamim Naqvi said.
The institutional framework will be in place in next 90 days as bill for establishment of Housing Authority will have to be approved from the provincial assemblies especially from Punjab, KP and Balochistan while Sindh plans to unveil its own housing scheme at provincial level.
“In the first year, we are going to construct one million housing units in rural, urban and semi urban areas with the estimated cost of Rs3.2 trillion out of which Rs1.3 trillion will be obtained through bank borrowings,” Task Force for Housing Chairman Zaigham Rizvi and Member Task Force Firdous Shamim Naqvi said in a joint press conference along with Mehmoodur Rasheed, Punjab’s Minister for Housing and Federal Minister of State for Housing Shahbir Qureshi here on Monday.
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Punjab’s minister Mehmoodur Rasheed said that they were going to inaugurate housing scheme in six major districts of the province from January 2019 for construction of 10,000 housing units. “We have identified 50,000 kanal of land with clear entitlement,” he added.
However, housing experts said that clear land entitlements and provision of financing are the major stumbling blocks in the way for achieving ambitious goal under the tenure of the PTI-led regime.
“The rent equalisation model will be adopted for ensuring provision of low cost housing. Anyone having no house will be eligible to apply for the provision of housing. Total housing requirement in the country stands at more than 10 million but we are intended to construct 5 million in next five years,” Firdous Shamim Naqvi, Opposition Leader in the Sindh Assembly, said.
The Task Force chairman said that they 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. “We are recommending to government to reduce tax burden for banks on the portfolio allocated for house financing,” he added. The capital adequacy ratio (CARs) for banks will also be increased, he added.
In India, they said that the housing finance had gone up to Rs9,000 billion so there was a need to increase housing finance to Rs500 billion for low income earners. He said that different politicians used slogan of provision of housing but they did not take practical steps to achieve the goal. First time, he said that the premier took ten meetings for 5 million housing units in last 60 days, he added.
He said that 5 million houses would be constructed in staggered manner as one million houses would be built in first year. The competitive bidding will be done for selection of builders in transparent manner, said Shamim Naqvi.
He said that the minister for finance had made commitment to reduce reliance on bank borrowing through slashing down the budget deficit so liquidity problems being faced by the banks would be resolved so they could spare financing for fulfilling the requirement of housing projects.
(This news/article originally appeared in The News on November 6th, 2018)