Housing for low income group - Zameen News

Housing for low income group

March 20, 2008 • news

By Dr Noman Ahmed: With a regulatory regime for managing the Real Estate Investment Trusts (REIT) in place, the Securities and Exchange Commission of Pakistan (SECP) is now ready to receive applications for issuing licences to interested parties for setting up REITs.

This has raised hopes in some quarters that the national housing scenario will undergo a significant change However, this view misses some important specifics of real estate and housing businesses. In these two closely linked segments, the stakeholders work for cross purposes and the two need to be treated separately .

The stakeholders comprise real estate developers (realtors), investors, agents, buyers, sellers, service providers, banks and financial institutions and regulators. A well-performing real estate mechanism is gauged by the periodic rise in the volume of trading, transparency, enforcement of essential principles of equity, rational profits to investors and a general trust among the participants.

The realtors face many challenges: choice of sites free from encumbrances, compliance of building/zoning regulations, prudent financial governance, keeping stakeholders satisfied and seeking profit-making opportunities. They focus on the financially strong clientele to expand the capital base and are not necessarily concerned about the social advantages of their ventures.

The real estate remains confined largely to upper and upper-middle income beneficiaries. The realtors produce numbers that are profitably viable but do not draw feasibility of projects from overall housing requirements.

In any welfare society, the state takes upon itself to provide housing – or at least the means for it – to its citizens. In the hybrid states of contemporary times, such workable options are created whereby citizens are able to access housing without fail. The variables of profit and market pricing do not surface in this pursuit. The provision of housing becomes one of the most essential functions of the state in transitional societies with massive socio-political dislocations.

Pakistan makes a crucial case study. Migration, natural population rise, demographic changes and depleting housing stock constitute the foremost reasons for the lingering housing backlog. The speculative trading in essential assets has constrained the provision of housing to all in a significant way. Land has become a tradable commodity. It used to be a social asset in the yester years. Thus the common people with low incomes and savings find it impossible to access housing.

The state institutions have not been able to generate worthwhile options for common people. A salaried person with a regular monthly income of Rs12000 and a household of six to support cannot dream of owning or even renting a decent house. He is forced to live in marginal conditions. The scene in the rural context is worse. With the swift depletion of shamlath (communal) lands, rural housing problem has worsened..

Mechanised farming has dislodged many peasants/tenants from agricultural lands. Continuing political upheavals and factional fighting has contributed to dislocation of millions of people to alternate locations which cannot accommodate the displaced. Housing is coupled with many associated social variables. The enabling environment for gainful employment, social and ethnic fusion and supporting state policies are some vital requirements to help common people acquire housing. In the present equation, the real estate and housing for common people do not have any underlying link. They can be brought closer for mutual objectives.

The realtors may be encouraged to develop programmes for the ordinary folks. State policies can gear support to such ventures where beneficiaries are the lower economic strata of the society. Financial packages may be devised in a manner where the access to housing credit becomes easy. These are tried and tested ideas. Social housing corporations, employer cooperatives and housing associations in urban areas are few instruments that have been effective across the globe. Pakistan can enormously benefit from the knowledge obtained from pilot projects demonstrated in many contexts.

Dawn [Internet Edition February]