Housing becoming unaffordable for the urban poor, says report
- 42 per cent households live in rental housing in urban areas
Kathmandu, January 2
The availability of cheap and affordable housing finance can go a long way towards making housing accessible to all, particularly the poor and low-income families who are in great need of housing, says a government report.
However, housing is becoming more and more unaffordable for the poor and low-income families due to excessively high prices of land in urban areas and building materials. Even rental housing is not affordable for many though it is available in almost all the major cities.
According to the report ‘Inclusive Cities: Resilient Communities’, the main problem of urban poor in major cities of Nepal is the non-availability of ‘rental rooms’ as the house owners construct only complete houses and flats for rental purposes, which are expensive and beyond the means of the majority of the urban poor who need just a room or two at the most.
According to National Census 2011, the percentage of households living in rental housing in urban areas is 40.2 (Kathmandu district: 58.7 per cent). In 2003/04, the proportion of households living in rental housing in Kathmandu Valley was about 33 per cent.
In 1990, the Government of Nepal established a specialised housing finance institution, Nepal Housing Development Finance Company, to make housing finance available to low-income families at an affordable rate. In addition to this, banks and financial institutions also provide housing finance in Nepal.
As per the recent figure of Nepal Rastra Bank, there has been Rs 88 billion worth of investment in housing and real estate. Of this, the share of commercial banks is Rs 65 billion, that of development banks Rs 12 billion, and that of finance companies is Rs 10 billion. The contribution of housing and real estate sector to the gross domestic product of Nepal is eight per cent.
The Employee Provident Fund has invested Rs 700 million in building and housing sector, which is hardly one per cent of the total loan and investment of the EPF. All these figures clearly suggest that there is no shortage of resources or funds in this sector; there are still great possibilities of mobilising additional resources to meet the housing finance needs of the poor and low-income families.
However, the existing housing finance being made available by the banks and financial institutions is not affordable due to high rate of interest. Banks and financial institutions require a house or land as collateral. Neither the housing finance on group collateral nor any subsidised loan for the poor is available, the report said.
Mention should be made here about the People Housing Programme being implemented by the Department of Urban Development and Building Construction has so far constructed more than 6,000 low- income houses in 30 districts of Nepal.