Under-construction projects: Purchasers of units may avail housing finance, says SBP

KARACHI: The State Bank of Pakistan (SBP) on Friday announced that purchasers of housing units in under construction projects may avail housing finance in the projects, where builder or developer has not availed construction financing.

According to SBP, in order to further facilitate buyers of housing units in under construction projects, requirement of builder/developer to avail construction financing is being relaxed.

Accordingly, as per fresh guideline, purchasers of housing units in under construction projects may avail housing finance against their housing units in projects where builder/developer has not availed construction financing

In such cases, the builder or developer will have to create mortgage charge over project’s land in favour of bank or DFI through an agreement. The charge will only be vacated after completion of the project and transfer of housing units to the purchasers. Moreover, the builder/developer will comply with all other provisions of Guidelines for Financing of Housing Units in Under-Construction Projects.

Any bank or DFI can provide housing finance to a purchaser of a housing unit in such under construction projects. However, if the purchaser wants to avail financing from a bank or DFI other than the mortgagee bank or DFI, then it will have to obtain NOC from the mortgagee bank/DFI in this regard.

Housing finance: SBP ups banks’ mandatory target

Moreover, financing bank/DFI of such purchasers will also be required to enter into bilateral arrangement with the mortgagee bank/DFI to secure its risk.

With regard to the requirement of informed consent mentioned in Clause 7 of Guidelines, SBP has clarified that the builder or developer will be responsible to arrange written informed consent from the customers who intend to purchase housing units from their own sources without availing mortgage finance. The letters of written consent of such purchasers will be submitted to the bank or DFI in original by the builder/developer.

In addition, the State Bank has decided to allow counting of wholesale lending of of banks to microfinance providers and housing finance companies for onward financing under Naya Pakistan Low Cost Housing (NPLCH), towards achievement of their housing & construction finance mandatory targets.

SBP, in January, has increased the mandatory target for financing of housing and construction of buildings from 5 to 7 percent of banks’ domestic private sector credit.

Copyright Business Recorder, 2022