Affordable housing projects: Govt to announce major incentives for finance access

ISLAMABAD: The government is planning to announce major incentives for granting access to finance for affordable housing projects including re-introduction of markup subsidy for low cost schemes.

The decision was taken during the last meeting of the Working Group on “Access to Finance” under the Chairmanship of Hafiz Mian M Nauman (Ex-MPA Punjab), Convener at Naya Pakistan Housing Development Authority (NAPHDA).

Sources told Business Recorder that the head of the working group principally agreed to a reduction of Policy Rate and Fixed Term loans for 10 to 20 years to promote mortgage financing, especially for affordable housing projects.

PM directs prompt completion of low-cost housing projects

The chairman of the Working Group also emphasised the promotion of apartment projects vis-a-vis the easy access to finance, with support for affordable housing apartment projects.

Following are the major recommendations of the Working Group to access to finance for housing:

(i); Reduction of Policy Rate (single digit) and also operating cost of banks;

(ii); fixed Term loans for different periods like 5, 10 and 20 years

(iii); re-introduce markup subsidy for low cost and affordable housing;

(iv); introduction of Mortgage Bond for easy access to finance;

(v); establishment of an Apex Housing Finance Institution;

(vi); expand role of Micro Finance Institutions (MFIs);

(vii); strengthening of Foreclosure laws regarding enforcement mechanism like eviction from property on default;

(viii); end User Financing Model for Apartment Projects;

(ix); banks keep 10% of their respective private sector credit available for housing and construction industry;

(x) develop a risk management framework to mitigate risks associated with mortgage financing (Insurance etc.);

(xi); strengthening of PMRC through budgetary support and enhanced collaboration with banks & financial institutions for subsidised credit facility (xii); awareness Campaign and Financial Literacy Program to educate consumers;

(xiii); development of innovative mortgage financing products to cater for all income groups like incremental Housing Micro finance; Community Based Housing Projects (Pool Resources, local NGOs groups), subsidised Rental Housing; Takaful Based Housing Insurance products, help to buy equity loans (First time home buyers), fixed for life mortgages (Fixed Rate), Green Mortgages, buy to let Mortgages (Individuals with properties for rental income), offset Mortgages (Mortgages linked to saving Accounts), collaborate with Real Estate Developers to offer mortgage financing options for consumers/allottees, develop Digital Mortgage Platforms with block chain-based solutions for secure and transparent mortgage financing, encourage Fintech companies to develop innovative mortgage financing solutions and strengthening the HR capacity of financial institutions in mortgage financing.

According to sources, Dr Faisal Shafaat the representative of State Bank of Pakistan gave detailed briefing regarding their regulatory framework in the form of prudential regulations.

He explained that the capital adequacy ratio enhanced to 35% and the banking sector was able to disburse Rs.233 billion in mortgage financing.

He also informed about the microfinance policy of SBP in connection with access to finance for the low-income group, whereby for Mera Pakistan Mera Ghar Scheme (MPMG), Rs 93 billion was disbursed. He highlighted several execution and subsidy issues in view of the IMF Policy.

The Chair propounded for relaxation in the policy rates (KIBOR) policy to facilitate easy and fast track access to finance for development of the housing sector.

The representatives of the SECP briefed about tax incentives for the development of low-cost housing.

Muhammad Ahsan Malik, Senior Real Estate Analysist discussed about simplification of Bank Loan System as well as system of bank scrutiny of documents to have loan for housing development.

He was of the view that PMRC may issue a Mortgage bond for development of affordable housing sector. Sardar Tahir Mahmood, President Federation of Realtors Pakistan emphasised on reduction of interest rate on loan for development of housing sector especially for low cost and affordable housing.

Mudasar Khan, Managing Director PMRC (Pakistan Mortgage Refinance Company) briefed about the initiatives of PMRC in accelerating mortgage financing with the help of World bank in the beginning and efforts of Pakistan Banking Association to promote housing finance.

He emphasised on implementation of foreclosure law – 2020 and requested for budgetary support to PMRC for development of affordable/green housing.

The green bond scheme should have to be introduced for the development of the housing sector as well as tax exemption may be given for low-cost/affordable/green housing. He gave examples of successful models of micro finance examples, particularly by Akhuwat in the form of incremental housing.

He emphasised on the implementation of Real Estate Regulatory Framework through RERA Act and stressed to extend it to provinces as well, sources added.

Copyright Business Recorder, 2025