BRIEF

1.
General. Naya Pakistan Housing and Development Authority (NAPHDA) has been established under Naya Pakistan Housing and Development Act, 2020 for the purpose of planning, development, construction and management of real estate development schemes and projects, with particular focus on affordable housing. NAPHDA has also been assigned the task of revitalizing the Construction Sector of Pakistan.
2.
Conceptual Roadmap. In order to address the countrywide deficiency of affordable housing, involvement / willing participation of private sector was deemed essential. Accordingly, as per the directions of the Honorable Prime Minister, a two-pronged strategy was evolved. On one hand significant measures aimed at revival of construction industry were adopted, while on the other hand roadmap for construction of affordable housing both by private sector and government owned entities was evolved.
3.
Revival of Construction Industry. After thorough consultations with all stakeholders including representatives of construction industry, State Bank of Pakistan, FBR, provincial governments and development authorities, major impediments hampering the growth of construction industry were identified for priority intervention. These included issues related to taxation, project financing through banks, project approvals and mortgage / housing finance. Details are covered in the ensuing paras:-
1. a.
  Federal Taxes. To address issues concerning volume and process of taxation, NAPHDA worked as a bridge between the construction industry and FBR. After necessary deliberations and consultations with all stakeholders including Association of Builders and Developers (ABAD), a time-bound incentive tax package including a fixed tax regime was introduced by FBR with following salient features:-
  1. 1.
    Fixed taxes on reduced rates levied on per square foot of construction and per square yard of real estate development.
  2. 2.
    Conditional / time-bound exemption from Section 111 of Income Tax Ordinance (concerning explanation of source of investment).
  3. 3.
    No withholding taxes on materials except for cement and steel.
  4. 4.
    No withholding taxes on services except those rendered by companies.
  5. 5.
    For low cost housing projects approved by NAPHDA, tax further reduced by 90%.
  6. 6.
    Exemption of tax on dividends paid to shareholders by Builders and Developers opting for taxation under this scheme.
  7. 7.
    One-time exemption from capital gains tax on personal accommodation, not exceeding 500 square yards in case of houses and 4,000 square feet in case of flats.
  8. 8.
    Advance tax on auction of properties reduced from 10% to 5%.
2. b.
  Provincial Taxes. Tax and Duties on sale and purchase of property which were 4-7% in different provinces were reduced to 2% by the provincial governments.
3. c.
  Housing and Development Finance by Banks. Presently the volume of housing finance in Pakistan stands at merely 0.25% of the GDP because of which mortgage facility is available to a very small segment of the populace. In order to address this issue, NAPHDA worked closely with the State Bank of Pakistan and with support of the latter, a comprehensive roadmap was worked out. The entire process was led and steered by the Honourable Prime Minister of Pakistan. Accordingly, State Bank issued a circular directing all banks to make 5% of their respective domestic private sector credit available for housing finance and construction related activities.
4. d.
  Introduction of Fresh Project Approval Regime. Development authorities all over Pakistan were following archaic processes and methodology of processing various approvals, which not only involved unnecessary delays but also malpractices. Hence, in consultation with all provincial governments and development authorities a largely automated and simplified approval regime was evolved. All development authorities are presently in the process of developing one window digital portals which would enable concurrent processing of approvals by all concerned authorities / agencies. This would also minimize human interaction and approvals would be accorded as per newly laid down, much reduced, timelines.
5. e.
  Markup Subsidy for Affordable Housing. In order to make housing finance / mortgage affordable for the low to middle income segment of the populace, significant markup subsidy was approved by Ministry of Finance. This was done after necessary consultation with State Bank of Pakistan on the direction of the Honourable Prime Minister of Pakistan. Details are as follows:-
  1. 1.
    5 Marla Housing Units. 5% markup for first 5 years and 7% markup for next 5 years. Tenor up to twenty years.
  2. 2.
    10 Marla Housing Units. 7% markup for first 5 years and 9% markup for next 5 years. Tenor up to twenty years.
4.
Creation of Affordable Housing. Consequent to creation of requisite enabling environment for development of affordable housing both by the private sector and state owned authorities / organizations, NAPHDA is working with all provincial housing authorities and the private sector for initiation of affordable housing projects all over the Country. In this regard following measures have been adopted:-
1. a.
  Cost Subsidy for the Low-Income Group on 100,000 Affordable Housing Units Planned during the Current Financial Year. In order to enhance the affordability of housing units, the Honourable Prime Minister has approved Rs 30 billion subsidy for the first 100,000 housing units planned to be constructed during the current financial year. Cost subsidy of Rs 300,000 per house would be afforded to allottees of low-cost housing unit.
2. b.
  Creation of Land Bank for Affordable Housing Project. All government departments and provincial governments have been asked to provide unutilized state-owned land parcels, suitable for affordable housing, to NAPHDA on reduced rates and deferred payments. NAPHDA is presently in the process of creating the required land bank.
5.
Constitution of National Coordination Committee on Housing, Construction and Development (NCCHCD). On the direction of the Honourable Prime Minister, NCCHCD has been constituted to monitor progress of the housing sector and resolve issues faced by the Construction Industry. The Committee, comprising all provincial chief secretaries, concerned federal secretaries, Chairman FBR and Governor State Bank, holds two meetings in a week, out of which one meeting is chaired by the Prime Minister.
6.
Miscellaneous. Some of the miscellaneous initiatives being pursued by NAPHDA, include:-
1. a.
  Master Planning of Major Cities. Prime Minister has directed all provincial development authorities to update existing master plans and where necessary, develop fresh master plans of all major cities / urban centres. NAPHDA has been assigned the task to oversee this process and ensure its timely completion in accordance with the vision of the Prime Minister.
2. b.
  Digitalization of Cadastral Land Records. Surveyor General of Pakistan has been assigned the task of assisting provincial governments in digitalizing cadastral land record of respective provinces. NAPHDA is coordinating and overseeing the process. Survey of Pakistan has successfully completed four pilot projects in different provinces and is now in the process of digitalizing land records of state owned lands and three major cities i.e. Karachi, Lahore and Islamabad, included in phase 1 of this project.