KARACHI: Fayyaz Ilyas, chairman, Association of Builders and Developers of Pakistan (ABAD), has demanded stern action against the cartel of cement manufacturers. He said that cement and steel are basic raw material for the construction industry
In a statement issued on Tuesday, he said that continuous increase in prices of cement and steel bars will badly damage the construction industry and the government will not be able to achieve the target of Naya Pakistan Housing Scheme.
ABAD chairman said that cement and steel manufactures started increasing prices of cement and steel bars when construction activities came to take off mode with the announcement of a Special Package for the construction industry by the Prime Minister.
He said that continuous increase of cement and steel bars prices by cement and steel manufacturers is a conspiracy against Naya Pakistan Housing Scheme and national economy.
He urged Prime Minister Imran Khan to take action against cement and steel manufacturers just like the government had taken action against sugar mills owners and appoint a commission.
He said that due to ever increasing prices of cement and steel, builders are facing difficulties to complete their projects and on the other hand common people are unable to build their dream homes.
Fayyaz Ilyas said that the construction industry, after agriculture, is the largest job provider and if the conspiracy against this industry is not stopped, thousands of skilled and unskilled workers will lose their livelihood and the national economy will have irreparable loss.
He said that it is high time to reactivate Competition Commission of Pakistan to take action against cement and steel manufacturers’ cartels.
He recalled that steel bar price per ton was Rs110,000 in November 2020 and at present this price is Rs178,500, which shows an increase of more than Rs68,000 per ton during the last 10 months.
On the other hand cement prices are also raised to Rs680 per 50-kg bag. About 60 percent of total cost of a high rise building consists of cement and steel while this ratio is 30 to 40 per cent in a normal residential project.
He said that in this situation the federal government will not be able to fulfill its promise of constructing 5 million low cost houses.
KARACHI: Association of Builders and Developers (ABAD) on Tuesday expressed concerns over sudden rise in prices of steel and cement, the basic raw material for construction industry, and termed it as a conspiracy against provision of affordable housing scheme launched by the government.
Fayyaz Ilyas, Chairman, ABAD in a statement expressed deep concern over sudden increase in steel and cement prices.
The ABAD chairman demanded the federal government to take stern action against these unscrupulous elements, who are trying to sabotage steps of the government for reviving the national economy.
He said that despite the fact that most of raw materials are local, cement and steel manufacturers have raised exorbitant prices of cement and steel to a level of Rs625 per 50 kg bag of cement and Rs126500 of steel per ton, which is no way justifiable and it looks that cement and steel manufacturers cartels are hell bent upon to crush the construction industry.
He said that cement and steel are main ingredients of construction but manufacturers of these two materials are busy minting money without any justification and the Competition Commission of Pakistan looks helpless to take any stringent steps against these cartels, he added.
Fayyaz Ilyas said that the construction industry is the second largest job providing sector after agriculture that is the reason why Prime Minister Imran Khan is giving due importance to this industry and has started Naya Pakistan Housing scheme for those people who otherwise are unable to own their dream home.
But, he lamented that steel and cement cartels are trying to sabotage a noble cause of the Prime Minister and dent the national economy.
He appealed the government to take stern action against the steel and cement cartel to save the construction industry and the national economy.
KARACHI: State Bank of Pakistan (SBP) on Monday announced interest rates for loan obtained under Naya Pakistan Housing scheme.
The maximum size of loan shall be Rs5 million and the loan shall be available for the maximum limit at 7 percent for first five years and at 9 percent for remaining five years. The bank prices shall be KIBOR + 4 percent.
The SBP said that in line with its vision of providing affordable housing to the masses, Government of Pakistan will be providing a markup subsidy facility for the construction and purchase of new houses.
This facility will allow all individuals, who will be constructing or buying a new house for the first time, to avail bank’s financing at subsidized and affordable markup rates.
This facility will be provided with the administrative support of State Bank of Pakistan as executing partner with Government of Pakistan and Naya Pakistan Housing and Development Authority (NAPHDA).
The government has allocated Rs33 billion for payment of markup subsidy for financing over a period of 10 years and has assured continuity of the facility.
For this purpose, State Bank and Government of Pakistan have signed a memorandum of understanding.
The markup subsidy facility will be available through all banks and is divided in three tiers:
Financing under Tier I is available for purchase of houses/apartments/flats of upto 5 marla or 125 sq. yards, with maximum covered area of 850 sq. feet and maximum price of Rs. 3.5 million, under NAPHDA projects. Maximum financing under this Tier is Rs. 2.7 million with maximum tenor of up to 20 years. Banks will charge maximum markup rate of KIBOR plus 250 basis points.
However, GOP will provide markup subsidy to reduce borrowers’ rate to 5 percent for first five years and 7 percent for next five years.
KIBOR is the Karachi Interbank Offer Rate that is determined in the interbank market on a daily basis and is used as a benchmark for most of the retail lending by banks.
These rates are published on the website of State Bank of Pakistan on a daily basis.
Financing under Tier II is also for houses/apartments/flats upto 5 marla or 125 sq. yards with maximum covered area of 850 sq. feet and maximum price of Rs 3.5 million.
Maximum financing under this Tier is Rs 3 million with maximum tenor of up to 20 years. This Tier facilitates construction or purchase of housing units by individuals and households who have not applied or qualified for NAPHDA projects.
Banks will charge maximum markup rate of KIBOR plus 400 basis points. However, subsidized rate for the borrowers for first 10 years under Tier 2 is the same as that of Tier I.
The Tier III of the facility promotes affordable housing for middle-income families. This Tier allows subsidized financing for construction or purchase of houses/apartments/flats of more than 5 marla (125 sq. yards) and upto 10 marla (250 sq. yards) with maximum covered area from 850 sq. feet to 1,100 sq. feet and maximum price of Rs 6 million.
Maximum financing under this Tier is Rs. 5 million with maximum tenor of up to 20 years. Banks will charge maximum markup rate of KIBOR plus 400 basis points. However, GOP will provide markup subsidy to reduce borrowers’ rate to 7 percent for first five years and 9 percent for next five years.
It is expected that introduction of the facility with supply of fresh housing units through concerted efforts of NAPHDA and other stakeholders will help transform Government’s vision into reality.
The SBP issued following rates and criteria through a circular:
Markup Subsidy for Housing Finance
1. Housing plays an important role in economic development by contributing in GDP growth, employment generation and social wellbeing. Further, more than 40 industries and 70 percent of unskilled labor are linked with housing and construction sector.
2. In order to provide formal financial services at affordable rates, Government of Pakistan is providing Markup Subsidy for Housing Finance. The key features of the facility approved by the Government are given below:
Particulars
Markup Subsidy Program
Eligibility Criteria
All men/women holding CNIC First time home owner One individual can have subsidized house loan facility under this scheme only once Only for construction and first purchase of newly constructed affordable housing units
Size of Housing Unit
Size of the loan is segregated into three tiers, as under: Tier 1 (T1) – Housing Units/apartments of up to 125 square yards (upto 5 Marla) with covered area of up to 850 square feet. (NAPHDA) Tier 2 (T2) – Housing Units/apartments of up to 125 square yards (5 Marla) with covered area of up to 850 square feet. Tier 3 (T3) – Housing Units of more than 125 square yards up to 250 square yards (10 Marla) or apartments with covered area from more than 850 square feet to 1,100 square feet.
Maximum Price of Housing Units
Maximum Price (Market Value) of a single housing unit at the time of approval of financing, as under:
Tier 1 (T1) – Rs 3.5 million Tier 2 (T2) – Rs 3.5 million Tier 3 (T3) – Rs. 6.0 million
Maximum Loan size
Maximum size of the loan of a single housing unit, as under:
Tier 1 (T1) – Rs 2.7 million Tier 2 (T2) – Rs 3.0 million Tier 3 (T3) – Rs. 5.0 million
Loan type
Long term housing finance loans
Loan Tenor
10/15/20 years, depending upon choice of customers.
Security Requirements
As per banks’ credit policy and prudential regulations for housing finance, the housing unit financed will be mortgaged in favor of financing bank.
Allocation in Budget
Finance Division shall give authority to SBP to debit GOP account on quarterly basis for the subsidy payment to banks. Payment will be made to the banks on submission of quarterly-consolidated subsidy statement as per format prescribed by State Bank of Pakistan.
Pricing
Pricing for Housing Loans: Tier-1: 5% for first 5 years & 7% for next 5 years at KIBOR+250 BPS Tier-2: 5% for first 5 years & 7% for next 5 years at KIBOR+400 BPS (Spread may vary) Tier-3: 7% for first 5 years & 9% for next 5 years For loan tenors exceeding 10 years, market rate will be applicable for the period exceeding 10 years.
Executing Agency
All commercial banks including Islamic banks and House Building Finance Company Limited (HBFCL)
Application Form
A standardized Application Form both in English and Urdu will require minimum essential information with simple format.
The processing time will not exceed 30 days after submission of all documents by the borrower and the same will be clearly stated in the application form.
Standardized Procedures
Banks to have standardized loan documents and risk acceptance criteria.
Monitoring
SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website.
Geographical distribution
Geographical distribution
3. Banks can also avail risk coverage against the housing finance under the scheme from Pakistan Mortgage Refinance Company (PMRC) at mutually agreeable terms and conditions.
4. The banks are advised to ensure successful implementation of this facility through dissemination of necessary instructions to branches/ regions and capacity building of field staff, development/alignment of financing products and marketing campaigns, etc.
KARACHI: Governor State Bank of Pakistan (SBP) Dr. Reza Baqir called a meeting of Banks on Wednesday for deliberations on the measures proposed by Naya Pakistan Housing and Development Authority (NAPHDA) and identify way forward to ensure sustainable market-led financing of housing projects and mortgages.
The meeting was chaired by the SBP Governor Dr. Reza Baqir, and attended by Chairman NAPHDA, Lt. General Anwar Ali Haider, and members of the think tank formed by the government including Shaukat Tareen, Arif Habib and Aqeel Karim Dhedhi among others.
Banks were represented by their respective presidents.
The SBP governor at the outset praised the work of Lt. General Anwar Ali Haider and NAPHDA for its significant potential contribution in meeting the shortage of housing in the country and accelerating economic activity in the country.
He said that housing finance has not only remained under-developed in Pakistan as compared with other emerging economies but seen little progress over time. In this regard, therefore, this initiative is of great national interest.
He emphasized that the construction and housing sectors have strong linkages with the rest of the economic sectors and offer a commercially viable and long term business proposition for banks.
He also stressed that supporting economic activity in these sectors would support economic growth and particularly employment in current times of economic stress.
He encouraged banks to view housing and construction finance as an opportunity to broaden their balance sheet and cater to the huge financing needs of the sector.
The SBP governor reiterated central bank’s commitment to play a facilitative and supportive role while also supporting a healthy credit culture in the country.
Chairman NAPHDA made a presentation to the banks on the key features of Naya Pakistan Housing Program. He shared the details of the underlying development model for the successful implementation of the initiative.
Complementing the presentation, Shaukat Tarin, member of the government’s think tank, presented a financial model and elaborated the incentives being offered by the government and emphasized that these will make the financing of developers and mortgages commercially attractive for banks.
The presidents of banks in their deliberations appreciated the Naya Pakistan Housing Program and expressed their readiness for participating in this initiative of national importance.
They also made queries and suggestions in this regard. It was decided that banks, NAPHDA, and SBP would work together to prepare an overall roadmap and execution plans with support from the relevant sub-committees of Pakistan Banks Association.
ISLAMABAD: The government will procure immovable properties for Naya Pakistan Housing Scheme through any means permissible under law including compulsory acquisition.
In this regard President of Pakistan on Thursday promulgated Naya Pakistan Housing and Development Authority Ordinance, 2019 to provide for housing and real estate development, and other activities related to land and construction.
As per the ordinance, the Naya Pakistan Housing and Development Authority will be established for the purposes of planning, development, construction and management of real estate projects.
The authority shall identify immovable properties and projects suitable for the development of housing schemes.
“It will recommend to the Federal Government to provide or procure immovable property or a project through any means permissible under law including compulsory acquisition, purchase, lease or licence through private agreement; donation by any private party or any state land or project by any government or other public authority, on such terms as may be mutually agreed between the Federal Government or the relevant transferor.”
It will facilitate the low income segment for availing housing under this ordinance or any other specific programme or otherwise through the provision of loans or other facilities.
Prime Minister of Pakistan shall be the patron of the authority and shall review its performance and give general policy directions.
The patron shall constitute the policy board comprising not less than five and not more than 11 members, including chairman for a term of five years.
The authority may raise funds through any means considered appropriate in the circumstances including through real estate investment trusts, bonds, sukuk and other forms of finances obtained on the basis of participation term certificate (PTC), musharika certificates, term finance certificate or any other financial or debt instruments or securities.
It may raise funds and obtain finance or loans from donor agencies, government bodies, and financial institutions, including on the security of its fund.
The federal government on the recommendation of the Authority shall constitute a Federal Land Bank and for which it may arrange or procure immovable property for the purposes of a scheme through any means permissible under law, including provision of State land by any government or public department, authority, agency or any corporation.
The authority shall prepare feasibility studies for the development of schemes and determine the mode of development accordingly.
