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Joint-Sitting approves PAC’s recommendation to mandate financial institutes to implement affordable financing scheme to promote affordable housing

Jun 21, 2021

The Joint-Sitting of the parliament approved the Public Accounts Committee’s recommendation to mandate financial institutions to implement affordable financing scheme to promote homeownership and affordable housing. The scheme will enable people in the low and middle-income group to have access to low-interest-rate housing loans.

According to some members of the parliament, currently, high-interest rate housing loan and other issues including access to construction materials are affecting individuals in finding an affordable home.

“If we take the example of Thimphu, firstly the land price is very high. Secondly, the interest rate on housing loan is quite high. This affects the chance to get a decent house for the people. Thirdly the price of materials to construct houses is high as well and it is also difficult to get the materials. We need to solve this,” said the works and human settlement minister Dorji Tshering.

However, some said, access to low-interest-rate housing loan alone will not make much difference until a measure is identified to curb increasing house rent.

“According to studies, house rent in Thimphu and Phuntsholing is increasing every year. The house owners are allowed to increase 10% house rent every two years as per the Tenancy Act. If this is the case, it will not make much difference even if the government provides loan at a low interest rate,” said Anand Rai, Sarpang’s Member of Parliament.

“It’s not enough to deduct the interest rate alone. We discussed that civil servants should have a place to live when they retire. It’s difficult to provide in the urban area. But we are discussing about providing sand, woods, and stone at a low price to construct in the rural area,” added foreign minister Dr Tandi Dorji.

The committee also recommended that the Department of Human Settlement develop a central database system for housing inventory. If developed, it will have the data on the number of apartments, affordability and housing shortages.

Kelzang Choden

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