KARACHI, Jan 15: The provincial governments failure to implement incentives, such as reduction in stamp duties and registration fee, announced in National Housing Policy 2001, continues to block the revival of and growth in housing and construction sector.
With the lowest investment of only one per cent from the banking sector compared to an average global spending of around 20 per cent of the GDP, the activity in housing and construction remains negligible and falls far short from actual demand.
Despite announcement of incentives in the National Housing Policy (NHP) 2001 about 18 months ago by the federal government, the four provincial governments have yet to take action and include the key incentives of the NHP in their official policy documents.
The NHP of 2001 in its key incentives suggested to all the provincial governments to adequately reduce their stamp duties and registration fee to an aggregate total value of one per cent. The objective of this move as noted by the policy makers and planners is to enhance registration, improve documentation and increase revenue receipts through higher turnover in the sector.
On the contrary the present stamp duty and registration fee structure in all the provinces is very high and experts believe that this is the main reason for poor growth and activity in housing and construction sector.
A total cost for entering into transaction with a financial institution for getting loan comes at around 9.5 per cent in NWFP, which is the highest in the country. Furthermore, there is a 5 per cent lease and sale deed cost of the value of land or house. In other provinces it ranges between 3 to 5 per cent with lease and sale deed cost more or less the same.
The housing and construction sector of the country is lagging far behind in providing the actual need of housing and shelter to the masses, and official estimates put the figures of backlog at six million housing units.
However, experts believe that the official figures are too conservative as they are based on single housing unit for a family consisting of large number. Even if the population of the country, which presently stands over 140 million, taken into account, ten per cent would come to around 14 million housing units.
These experts further said that in order to catch up with the fast aggravating situation it would be ideal that a zero per cent duty and registration fee be allowed in all dealings with financial institutions.
This move, they said would lead to documentation of the economy as transactions with financial institutions lead to full documentation.
Above all they said it will give a boost to the construction sector and provide employment as a large number housing related industries will get jump start and generate employment in shortest possible time.
The increased activities in the construction sector will lead to revenue generation, greater employment, which in turn, will lead to better law and order situation.