ISLAMABAD: The State Bank of Pakistan (SBP) has proposed a tax holiday of five years on the income of banks/DFIs earned on mortgages and tax exemption for developers/builders, and incentives for general public in the upcoming budget 2018-19 to promote housing finance in the country.
The SBP, in its proposals sent to the Federal Board of Revenue (FBR), said it is in the process of formulating a policy for promotion of low-cost housing finance in Pakistan
The policy focuses on the regulatory incentives, risk mitigation mechanism for financial institutions and mechanism to address the issue of affordability for low-income borrowers.
As per SBP definition to qualify under low-cost housing, purchase/ sale price of the housing unit/ apartment should be up to Rs2.5 million and the borrower’s monthly the income up to Rs50,000. The maximum loan-size under low-cost housing shall be Rs1.40 million.
The central bank suggested that the federal government may announce tax incentives package to achieve desired objectives of the low-cost housing finance policy.
The SBP in coordination with relevant stakeholders has long been pursuing to give impetus to housing finance though facilitative policy measures. Few institutions consider housing finance as financially unviable product due to longer maturity period and foreclosure related issues.
