HOUSING is the third basic human need, after food and clothing. An average family derives much more sense of security from owning a house than any other worldly possession. The successive governments have not been able to significantly improve housing availability situation. Rather, the backlog of housing units is on the increase, now estimated seven million housing units as against seven- year earlier backlog of five million housing units.

Looking at the prevailing prices of real estate coupled with the high cost of construction and procedural delays, shortage of housing units would increase unless remedial measures for increasing housing affordability are taken on priority by the government.

The findings of different government bodies, mainly Council for Works and Housing Research (CWHR), point out the conditions and prospects of housing availability, affordability and shortages. The overall housing stock consists of 39 per cent kutcha houses (mostly without proper water supply), 40 per cent semi-pucca (without planned sanitation and sewerage system), and 31 per cent pucca houses. The average household size is 6.6 persons and occupancy at 3.3 persons per room. The increasing housing deficit can also be attributed to decline in public sector share in housing from 10.9 per cent in the 1960s to 5.9 per cent in 1990s, with limited institutional finance.

Housing backlog is on the increase due to a number of factors. All cities and towns are growing due to population explosion coupled with migration from rural areas. A house which catered to the needs of a large family some 20-30 years ago has now become insufficient as in most cases the number of family members has grown. People have started constructing second and third storeys on old houses which has deprived the inhabitants of fresh air and sunlight. Many people have converted ground floors of their houses into shops. This adversely affects the living conditions.

The supply of new plots of land is much smaller than the demand and therefore, the prices of land have increased manifold. Large scale investment in real estate has made availability of plots more scarce particularly for the people of small means. Other impediments to the construction include high cost of material, difficulties in raising bank credit, complicated regulatory procedures for purchase of land as well as approval of the building plan. As a result, the number of new houses built in any year is much smaller than required. Some of the people are forced to move to kuchi abadis or slums, lacking civic infrastructure.

Housing shortage can only be tackled through an overall strategy and executed through coordinated efforts by different tiers of government and the people for overcoming the negative factors in availability of plots and construction activities. Conducive conditions must be created so that houses that are affordable by the middle, lower middle and poor classes are actually built in large numbers in big cities and towns. This approach has the potential to meet the current need for new houses as well as reduce the backlog in the shortest possible time. Some of the priority areas needing government attention are discussed below.

Presently a lot of capital has been tied up in the plots of land for housing. Most of investors are considered to have financial resources but would not venture to construct houses for renting out simply because the rent laws in most parts of the country are seen as favouring the tenants more than the landlords. Presence of a large number of rent dispute cases before the Rent Controllers or the courts in various towns and cities act as a disincentive to housing construction for renting out. There is an urgent need to make the whole process equitable to both the parties such that the disputes are settled within weeks if not in days. This has the potential to quickly tackle the housing shortage as it would open an appropriate investment venue for regular rental income to the retired and other people, who these days, are getting very low returns from bank deposits or investment in the national saving schemes.

The idea of a ‘land bank’, first floated by the then finance minister last year, was that the land owned by the provincial government, local development authorities (such as KDA, LDA) and cantonment boards could be pooled and released for development on a regular basis, in order to meet the ever-increasing demand for housing. The minister reportedly had chaired a meeting, at the State Bank of Pakistan, with bankers, the developers, contractors, provincial and local authorities as well as the suppliers of steel and cement and the issues hampering construction and financing activities were discussed. The minister had asked the stakeholders to send concrete recommendations.

The SBP meeting discussed the issues largely pertaining to large stakeholders who are well organized and are not worried about availability or affordability of houses. The homeless individuals, though number in millions, are not organized to be able to properly submit their difficulties and grievances to the government for redress. The priority should be to increase availability of plots of land to the middle, lower middle and poor people.

The provincial governments/development authorities might concurrently announce new housing schemes in different towns and cities and allocate large extracts of land for the purpose. Plot sizes might be kept relatively smaller (say 80, 100 or 120 sq. yards) so that maximum number of homeless people is accommodated. The land may be allotted to the would-be house owners on merit, in a transparent manner, at reasonable prices, with the provision of making full payment up-front, or in instalments. Timely provision of electric, gas and telephone connections would encourage construction activity.

The supply of plots of land and the construction of the houses can get a big boost if all the kuchhi Abadis are regularized and the title documents compulsorily given to the occupants within a month or so. In case, private landowners wish to start housing schemes, they might be allowed but after their plans including selling prices, mode of payment, delivery dates, etc are duly approved.

The government may consider streamlining and expediting the procedure for preparing the title documents and their provision to owners within a short time of the transaction for the sale/allotment of land. This would help in early finalization of loan applications, by banks, and DFIs. Fees/charges on sale/transfer of plots needs to be reduced. These days, some of the city governments have contracted out the rights to the collection of such fees to private contractors, some of which reportedly fleece property owners and delay the process on flimsy grounds.

Approval of the site / building plan is considered time-consuming and costly. Construction cannot start without such an approval. Loans cannot be raised without these documents. The provincial and city governments would be doing a big service by streamlining and standardizing the whole process. It is suggested that based on popular designs in a given locality for different plot sizes, standardized building designs might be prepared by town-planning and construction experts and pre-approved. Each prospective builder /owner should be free to start construction using any of the pre-approved design and inform the city government of the design selected for record purposes. Special approval may be required in rare exceptional cases. This would cut the time, effort and cost involved in construction.

Barring exceptions, the banks / DFIs have not been offering the best financing deal to individual house owners who deserve to be treated fairly. Fair practices by financiers can encourage house builders to avail loaning facilities from these institutions. The SBP might consider scrutiny of these documents, as well as other practices and procedures, to ascertain that borrowers are treated fairly. Complete sets of legal and security documents need to be provided to applicants up-front, along with loan application form.

In addition to cost of land, prices of construction material such as cement, steel, etc have increased to the discomfort of the prospective house-builders. The government might consider providing training opportunities and refresher courses for engineers, in order to upgrade their professional skills and enable them to prepare low-cost construction plans.