It seems that the government is putting the recent war-scare behind it. The Prime Minister chaired two meetings with tax officials, and exhorted the spreading of the tax net and the plugging of holes for evasion, not because of the need for money for any war effort, but so as to meet the revenue targets set by the IMF. However, it was Planning Minister Ahsan Iqbal who chaired a meeting which dealt with another problem, and which could have long-term ramifications: the housing market, more specifically, the meeting examined mortgage finance.
Mr Iqbal specifically mentioned the car financing model, which has been rendered Islamic by the payment of instalments as a form of rent-cum-repayment of loan.
It is true that the main problem of housing is not really the existence of housing units, though that remains an issue, with the number of new housing units needed to meet population growth, but financing the purchase of those units. The model which the meeting seemed to endorse was that of housing mortgages, with monthly payments corresponding roughly to rental, resorted to by those who cannot afford to buy a house. In this, the financial institution has a lien on the house, collecting a rent as well as a repayment of the principal. It has happened in the car market that vehicles bought on installment have been res-sold, with the seller paying off his loan, or the buyer taking it over. This model has not made much progress in the housing market, which remains a strictly cash-only business. Car dealers had begun car financing in addition to banks, and if the trend begins in housing, it will perhaps be a possibility that real estate dealers may need to start offering financing. Mr Iqbal referred to best practices from abroad, so that might well include specialised financial institutions.
One problem that might crop up is that financial institutions have very strict lending requirements, which is perhaps one reason why mortgages have no the housing situation is a crisis which both the PML(N) and the PTI have recognized in previous tenures, but have failed to resolve. At one level, the problem is perhaps not more important than the recent Pak-India conflict, for there is no point in having a home which is not secure. But it is very much one of the problems that can only be solved when there is peace.
