Addressing the housing deficit in a right way

Housing is the basic need of a family and the right of every citizen of the country. Like many other countries, particularly densely-populated Asian countries, the housing deficit is a complex issue, yet an emerging crisis in Pakistan, which needs to be addressed with proper planning, long-term policy and dedicated resources.
In recent years, various institutions carried out different research studies and surveys to address the elephant in the room mainly to develop an independent ecosystem in the country which could meet the housing requirement of the citizens, rather than typical government-owned schemes, which ended up as the schemes of corruption in the past.
The present government has succeeded in rolling out a self-finance housing scheme and a low-cost housing finance scheme for the general public to meet the housing deficit in Pakistan, which has already surged over to 10 to 12 million as per estimates of various local and global think tanks.
Interestingly, a phenomenon of meeting the housing deficit through these schemes is a big opportunity for the national economy itself which will not only speed up construction activities to a surprising level but stir up activities in various 70 allied sectors. Plus, construction and the allied sectors could generate hundreds of jobs to unskilled and skilled professionals across the country.
PM Imran Khan, cognisant of the role of the construction sector in the economy, has been actively working on the revival of this sector.
A couple of years ago, the incumbent government announced Naya Pakistan Housing Scheme in various cities. Last year, it also came up with a low-cost housing scheme for the masses who do not own a house, yet a subsidised profit rate could help them get financing facility from banks, which could facilitate them to own housing units in a period of up to 25 years, paying the instalments to banks instead of monthly house rent to a landlord.
There were various issues and restrictions in the financing scheme that could not facilitate the masses over the period with merely 10,000 applications received by the banks. Interestingly, the government reviewed the terms and conditions on the basis of feedback, and recently relaxed them to encourage masses to avail the low-cost housing scheme in the future.
In order to push banks, the banking regulator has set a 5 percent domestic credit target for banks to meet in the housing sector. On the other hand, the government allocated a subsidy of Rs36 billion for the next ten years, to rejuvenate the ecosystem of the low-cost housing scheme.
Certain checks have been put in place to avoid the exploitation of the scheme from investors, however, these are not enough and can easily be dodged unless more transparency is introduced. For instance, the housing scheme can be availed by a person with no prior ownership of house. Banks need to make sure that beneficiaries of the scheme should be genuine and not be exploited and financed by investors through their employees and relatives. In the recently revised conditions, the financing facility has been extended to Rs10 million whereas the minimum period of payment is reduced to 5 years from 10 years.
The involvement of investors in these schemes could cost a deserving person and the system as a whole; potentially leading to an upward spiral in property prices.
A major impediment in the scheme is the red-tapism and the obvious bribe culture in the system. The government has done little on this issue in the past. Many think tanks suggested that the federal and provincial government should set up a one-window operation system as the real estate authority at the district level to introduce a transparent, hassle-free and corruption-free mechanism.
The proposed authority will be detrimental to corrupt elements in society. It will also keep a check on the malpractices of developers and builders of the housing project from overcharging, delays to handover of possessions and the notorious exercise of ownership duplication.
The worrisome situation of urbanisation is another aspect which is feared to intensify through this scheme. The rapid urbanisation in Pakistan through migration of people from rural to urban areas is already creating multiple issues to overcrowded and densely populated cities including socio-economic issues and ethnic division.
For instance, the massive influx of families from rural Sindh and Punjab to urban areas particularly Karachi leads it towards overpopulation vis-a-vis resources allocated by the government as per official censuses. The competition among local residents and migrant residents has intensified on many fronts including employment and business opportunities and property ownership. Rural to urban migration is one of the phenomenon which spikes property prices in many cities including Karachi, Lahore, Islamabad, Rawalpindi and Peshawar.
The government and concerned authorities should assess the fallouts of the schemes prior to any crisis which could take us to the point of no return. For instance, various investors in the construction sector including builders and developers availed tax incentives and amnesty schemes from the government.
There are many projects that have been ready for the public, mainly small-sized housing units and scores of projects are being developed in different parts of the city to meet the housing deficit, but a majority of these projects are poorly planned without taking into account the challenges of warm weather and rainy seasons.
Various projects have been announced in collaboration with banks in far-flung areas which are located even beyond the outskirts of cities. Customers are allured due to lower prices, whereas the standards of living are low with no basic availability of utilities and transport.
Instead of expanding the boundaries of cities like Karachi and Lahore, the government could develop new cities through the connectivity of highways and basic infrastructure to residents.
The proposed authority, in collaboration with utility companies, should assess future demand and consumption of water, gas and electricity for the upcoming housing schemes. This is, at least, what the government must do for the survival of the housing developments.
The government should not aggressively and blindly promote the scheme but should also work in parallel on town planning and the development of cities as the next steps.

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