Sign in Subscribe
Public finance

Pakistan Launches New Low-Cost Housing Scheme with Rs5 Billion Allocation

Strategic Insights

— 2 min read

The government of Pakistan has launched a new low-cost housing scheme, with a budget allocation of Rs5 billion for a mark-up subsidy. The initiative, launched in collaboration with the State Bank of Pakistan (SBP), aims to enable individuals to build homes through affordable credit. As part of the scheme, a proportionate tax credit on profits paid on loans taken for the construction or acquisition of houses measuring up to 250 square yards or flats with an area of 2,000 square feet or less will be offered. This move comes as part of a broader push to revitalize the housing and construction sectors in the next fiscal year.

Key Takeaways:

  • The government has allocated Rs5 billion for a mark-up subsidy under the new low-cost housing scheme, to be launched in collaboration with the State Bank of Pakistan (SBP).
  • The scheme offers a proportionate tax credit on profits paid on loans taken for the construction or acquisition of houses measuring up to 250 square yards or flats with an area of 2,000 square feet or less.
  • Rs1 billion has been allocated as a subsidy for the Naya Pakistan Housing Authority (NPHA) to further support the sector.
  • The initiative is aimed at addressing the country's housing shortage and enabling individuals to build homes through affordable credit.
  • Finance Minister Muhammad Aurangzeb has announced the new housing scheme in the upcoming budget, which has been welcomed by real estate experts.
  • The government has also reduced withholding tax on property purchases, cutting the rate from 4% to 2.5%, from 3.5% to 2%, and from 3% to 1.5%.
  • Real estate experts have praised the government's recognition of the sector's importance for national growth, employment, and industrial development.

Statistics:

  • Rs5 billion has been allocated for the mark-up subsidy under the new low-cost housing scheme.
  • Rs1 billion has been allocated as a subsidy for the Naya Pakistan Housing Authority (NPHA).
  • The tax credit offered under the scheme will be proportionate to the profits paid on loans taken for houses measuring up to 250 square yards or flats with an area of 2,000 square feet or less.
  • The government has reduced withholding tax on property purchases from 4% to 2.5%, from 3.5% to 2%, and from 3% to 1.5%.
  • The new housing scheme aims to address the country's housing shortage and enable individuals to build homes through affordable credit.

Sources:

  • [Finance Minister Muhammad Aurangzeb's announcement]
  • [State Bank of Pakistan (SBP) press release]
  • [Real estate experts' comments]
  • [Pakistan government's FY26 budget proposals]

Read more