Whilst incumbent governments often find themselves on the receiving end of critical feedback, it would be a folly to not acknowledge the focus this government has given affordable housing, housing finance and the construction sector through the adoption of new regulations, establishing new regulatory bodies and incentivising the private sector with a series of subsidies in housing finance and the construction sector.

The aim of highlighting the following issues is that rightfully so, every government should have this level of focus in protecting the rights of its citizens, particularly those from low and middle income households and safeguarding their prerogative to safe, secure and stable shelters.

Regardless of good intentions by some of the people at the top of the political pyramid and some positive policy enactments, there are a few fundamental flaws in our system that are hampering the way these policies are being enacted and which will diminish the desired outcome of allowing the aam aadmi to climb the property ladder. To this effect, the following points are noted with the sincere hope that the powers that be take notice and work towards addressing these deficiencies.

1

Everyone is out to profiteer from this focus on affordable housing. Whilst profit making is not bad inherently, the types of people and levels of profits people are trying to make are inherently bad and blocking progress. In other words, the people who are meant to facilitate and enforce the policies are out to make a ‘speedy’ profit. This is the first and one of the most important areas that should be addressed on a priority basis. These costs make it prohibitive for low-income earners to regularise their property documents or obtain a lease so that they can obtain financing from the various private and public institutions that have been incentivised to lend.

2

All banks, development finance institutions (DFIs) and microfinance banks (MFBs) must improve their customer offering, scrutinise their cost of originations and improve operational efficiencies. Currently, mark-up subsidy incentives are not correctly incentivising this. MFBs should not be the only institutions receiving higher subsidies for low-income lending; this should be the case for any financial institution (FI) lending within an income cohort. Set income band level targets per FI. Create an even playing field for newly established housing finance companies, offer them access to the same type of subsidy programmes as offered to existing banks, MFBs and their government sponsored DFI or house building finance company. Only once the primary markets start scaling up can structured interventions for the creation and expansion of a secondary market make sense.

“Regardless of good intentions by some people at the top of the political pyramid and some positive policy enactments, there are a few fundamental flaws in our system that are hampering the way these policies are being enacted.

3

Focus less on just constructing new housing and more on actually addressing the plight of millions of people currently living in katchi abadis. So long as settlements are not hazardous or warrant demolition, empower the katchi abadi authorities with meaningful budgets, task them on a war-footing to complete the mapping of boundaries of slum areas, prioritise the laying of roads, water supply, sewerage and electrification. Using basic documentation, plotting and ownership records through consensus-based approaches, charge nominal amounts to register their properties and issue titles expeditiously. Do so in a way whereby the end result does not benefit existing slum lords but the people actually living in them. Besides providing a legitimate claim to the property, this will encourage financial institutions to start providing financing to property holders to invest in safe structures, thereby substantially improving living conditions in these colonies. For rural targets, create an enabling environment for housing finance companies to collaborate with existing MFBs for the distribution of housing finance, equip locals with training and depot-type facilities for raw materials to create the right environment for locals to formalise their ownership titles and renovate their existing houses through structural improvements. Tremendous strides have been made in this regard in our neighbouring countries.

4

Create government-led, industry-wide working groups with public and private institutions’ participation (banks, NBFCs, land development authorities, building control authorities, and other government departments) focusing on the factors that may facilitate progress in affordable housing demand and supply, such as increased availability of housing finance, property documentation issues, regularisation of slums, digitisation and centralisation of land records, improving the efficiency of public sector institutions associated with affordable housing, construction and housing finance. Implement strong governance structures for these committees with senior administrators monitoring progress.

“Only once we have a firm handle of the stakeholders in this industry can the government make further attempts to improve and regulate them... The government also needs to establish a unit that actively monitors and allocates affordable housing to its citizens.

5

Get your act together regarding the digitisation of ownership and land records. The current process, although robust, is circumvented due to corruption. Only the government has the power to cut through competing interests bent on maintaining this chaotic status quo and affect positive change. Everyone knows what needs to be done. Put in place provincial level accountability to create digitised, centralised records of property ownership and digitise all property transfer documentations, mutations and mappings. Scanning paper-based fards (the document indicating proof of a property’s ownership) and creating digitised forms will not solve the challenges. Leverage drones, blockchain and GIS mapping to address these challenges. This is not far-fetched; several countries are actively using this today. Hold organisations and governmental departments tasked with these strategic agendas to deliver. Only once the basics are homogenised and progress made can the government create value-added digitised services, such as online verification of registered titles, electronic transfers and execution of immovable assets, digital hooks and references to all existing encumbrances, and connectivity for case references for existing or previous property disputes. Only then can we hope to move towards improving efficiency within the conveyancing process.

6

On the supply side, it is imperative to implement a Real Estate Regulatory Authority across Pakistan and mandate all individuals within the construction sector to register, be it contractors, developers or construction consultants. Only once we have a firm handle of the stakeholders in this industry can the government make further attempts to improve and regulate them. Creating national level vocational programmes for all construction service providers with easy access to training and certification will go a long way in improving the quality of construction and adherence of building code regulations. The government also needs to establish a unit that actively monitors and allocates affordable housing to its citizens.

Jamshed H. Meherhomji is CEO, Trellis Housing Finance Limited.
j.meherhomji@trellisfi.com