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Naya Pakistan Housing Scheme – Kingdom Valley Islamabad

In the Naya Pakistan Housing Programme (NPHP), a government-run pilot program, former Prime Minister Imran Khan pledged to build five million homes nationwide during his administration. Given the speed of development, the housing program has gained a lot of support, particularly among the lower and moderate-income groups. 

The Naya Pakistan Housing & Development Authority (NAPHDA) is a corporation that was set up on January 15, 2020, as a result of a law passed by the parliament. Its mission is to plan, develop, build, and manage real estate development projects, including housing. The Authority, which is the government’s development arm, is working to create homes and infrastructure across the nation in both for-profit and nonprofit capacities. The authority would offer all investors and builders one-stop shopping through a facilitation center.

Due to Pakistan’s skyrocketing property prices, the initiative intends to provide housing for individuals who cannot afford to buy their own home.

The Authority is housed in the Cabinet Division of the Prime Minister’s Secretariat and operates under the patronage of the Prime Minister of Pakistan. There are now eleven members on the Policy Board, with representatives from both the public and private sectors. 

The Authority’s headquarters are located in Islamabad’s Prime Minister’s Secretariat. Regional Offices have been created in Islamabad, Lahore, and Karachi, while Regional Offices are also being established in Peshawar, Quetta, and Multan.

In order to secure mortgage loans and financing for the provision of affordable housing to the low-income sector, the Authority will conduct studies, surveys, technical research, and interactions with banks and financial institutions. For the purpose of funding low-cost housing projects, the Authority may also launch programs like Real Estate Investment Trusts, bonds, sukuk, and Term Finance Certificates, among others. 

The best possible use shall be made of consultant services for design, technical evaluation, and monitoring. Any of the Authority’s functions, including development projects, may be contracted out in any way, including through a public-private partnership.

The banks will offer home loans with simple terms and conditions to help these people. It’s interesting that the loan balance could be repaid in a minimum of 20 years. If you qualify, all you have to do is save up 20% of the entire cost of the house as a down payment, and the bank will cover the other 80% via the home financing option. 

Purpose of Naya Pakistan Housing Program 

Improving Pakistanis’ access to housing is one of Naya Pakistan’s main goals. Over 10 million homes are still unbuilt, and we continue to add to this backlog every year. The Pakistani people’s access to housing will be increased by this initiative, and the housing market will be given a boost.

The goals of this loan scheme are to:

  • Increase buying power by providing loans of longer tenure.
  • Reduce cost by standardizing design and specifications.
  • Reduce the upfront cost of builders by providing them land in installments and minimum time for approvals and infrastructure before the start of construction.
  • Provide project loans to builders so that they can complete the housing project in the shortest possible time. 

The cost would be 15 to 20% less than the present market price thanks to the aforementioned initiatives, and by offering long-term loans, we would increase the number of individuals who can afford housing by 100% in the first three years. Approximately 500,000 people can currently afford to buy homes and apartments each year.

This initiative will also assist us in fulfilling the promise of 10 million jobs, as these homes alone, which total 3 million over the next five years, will generate an additional 60 million job years, or 12 million jobs annually, in the categories of unskilled, semi-skilled, and skilled labor, in addition to an additional 1 to 1.5 million jobs in related industries and the service sector. Each home will create 20 jobs annually.

This effort would need at least doubling the capacity of all industries involved in building.

This program would create a further one to three hundred thousand employment opportunities in the service sector, such as banking, security, maintenance, and insurance.

The economy would also be boosted by this program alone because it will turn out to be the main driver of economic growth. The housing sector alone, along with related businesses and services, would contribute 15 trillion rupees to the national economy. (If the average value of each unit is 3 million rupees). This would entail increasing the contribution by more than 8 to 9 trillion rupees over the course of five years.

What is Housing Loan Scheme for Naya Pakistan Housing Program? 

The State Bank of Pakistan declared in October 2020 that the government provides Pakistan’s citizens with a facility for the building and purchase of new homes. “This facility would allow all persons, who will be building or buying a new property for the first time, to use the bank’s financing at subsidized and inexpensive mark-up rates,” reads an official statement from SBP.

As the government of Pakistan’s implementing partner, the State Bank of Pakistan (SBP) and Naya Pakistan Housing and Development Authority are providing administrative support for the facility (NAPHDA). The uncertainty about whether loans would be available to them or not was dispelled by this announcement.

The Naya Pakistan Housing Programme, which intends to provide millions of people with homes, is regarded as the most significant undertaking for the future of the nation. The prime minister has observed that people have been having trouble getting loans through the Naya Pakistan Housing Program. He has therefore ordered all banks to make it simpler and more accessible for individuals to obtain loans.

According to him, the NPHP will be a significant initiative in the history of Pakistani real estate, and once people begin building homes, there will be a boom in the building sector as well, leading to the creation of additional jobs in Pakistan. Construction and related businesses will simultaneously bring about a revolutionary shift in the nation and increase its wealth.

How Will The Scheme Work? 

The authority will verify all land titles, purchase land, and, with the assistance of builders and developers, determine what product is required for the market based on the information gathered and the results of market analysis.

Second, the authority will make sure that the necessary infrastructure, such as access, water, sewerage, power, etc., is in place before the program is begun.

With the aid of a reverse auction or electronic auction, builders will compete to offer the end user the best price feasible.

The houses will be distributed to the final buyers in order of priority.

The contractors will finish the improvements using their own money, their own funds, or loans they have received specifically for the project. The builders are responsible for repaying these loans together with any accumulated interest once the project has been turned over to the final client.

The quickest feasible completion of the projects is ensured by this finance plan. The cost is avoided for the final consumer.

The cost of the land would not be reimbursed by the builder; rather, it would be recouped from the final customers. Once the loan is repaid, the title of the property will be transferred to the bank, which will then transfer it to the condominium organization.

During the construction phase, the final customers will only be required to pay 20% of the unit cost, but first they must receive financing permission for a loan from a commercial bank for 80% of the total. The homeowner will pay back this loan over a twenty-year period. The goal is to get the installment as near to the amount of rent they are currently paying as possible.

We anticipate that the aforementioned actions will enable the developer to sell apartments at prices that are at least 15% to 20% below those of the market. As a result, the units plus the 20% down payment serve as highly rated collateral for the loan the bank is providing to the final customer.

In addition, the banks would take into account the combined income of immediate family members such as the husband, wife, and children while processing the loan application.

The following sources of funding will be taken into consideration to increase the financial resources of the banks: pension funds, zakat funds, provident funds, money at the disposal of insurance firms, EOBI, Social Security institutions, etc.

The banks would be permitted to store funds with remortgage businesses on the establishment of a secondary finance market.

The Loan Limit Has Been Increased to RS.10 Million 

According to the plan, those who already own residential plots will be able to build houses there. The money will enable people to buy 5 and 10 marla houses, apartments, and residential plots.

Former senator Faisal Javed claimed in one of his tweets that just as the distribution of homes had started, so too had the realization of aspirations. He stated that people would no longer have to pay monthly rent because they could become homeowners by just making minor loan payments.

He went on to say that it is a revolutionary act. Today, anyone may own home; all you need to do is speak with banks to learn more about the loans.

Executing Agencies 

All commercial banks, including Islamic ones and the House Building Finance Company Limited, accept loan applications (HBFCL). Standardized loan paperwork and risk acceptance standards for banks.

On a quarterly basis, State Bank of Pakistan will publish consolidated data regarding the loans provided under this program on its official website for the benefit of the general public.

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