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Housing policy to ensure affordability and accessibility

The government shall regulate the housing sector to ensure that rental costs do not exceed 30 percent of household income, according to the draft housing policy, 2019.

The policy states that the government should also provide public housing to low and middle-income households.

More than 65 percent of households live in rental units in urban areas where the majority of available rental housing costs more than 30 percent of household income, the policy points out. Most of the Bhutanese houses or structures, it states, are not disabled friendly.

The Royal Monetary Authority (RMA), the draft policy states, shall adopt appropriate social and welfare-oriented monetary policies to promote affordable housing. It was found that finance is a critical input for housing development and housing loans from financial institutions and private savings are the only sources of equity for private housing developers. The high interest rate on housing loans, it states, translates into high rents or higher sale prices for housing units.

Should the policy come through the government could initiate measures to adopt systematic and appropriate allocation of national budget for public housing development,  fiscal measures to provide incentives to individuals for purchase of first residential apartment or construction of first house limited to two storeys for self- occupations.

Urban population increased from 30.9 percent in 2005 to 37.83 percent in 2017 and is projected to rise to 56.8 percent by 2047.

The draft policy noted that the main challenges faced by housing developers in the country are high cost of land acquisition and construction (materials and labour), and expensive development finance and developers’ inability to repay commercial housing loans even with high rental incomes derived from the housing properties.

“These challenges have contributed towards high rent burden in urban areas,” it states. “A majority of Bhutanese cannot afford to own houses and have to depend on rental housing.”

The draft-revised policy once approved is expected to address such challenges in the housing sector as well as address the existing and future problems of housing.

Some of the objectives of policy are to provide safe and affordable rental housing for all, promote home ownership, encourage private, corporate and government entities’ participation in the provision including preservation of Bhutanese tradition, culture and local ecosystems.

Pointing on some of the challenges and policy interventions, the draft policy states that the government in collaboration with the National Land Commission shall identify and include state land for housing development in human settlement plans.

It has also called to allocate land on lease for public housing development programmes, for development of employee accommodations, and carry out re-planning, re-development and densification of existing public housing colonies.

The cost of construction materials is one of the factors contributing to high cost of housing construction where the cost is further escalated by high transportation cost. The draft policy suggests the government to mandate the use of certified locally available construction materials in public housing development to boost local economy.

There are 163,001 households in the country as of 2017, of which 102,607 are rural households and 60,394 are urban households. Almost 36 percent of the households own houses in rural areas against seven percent of households owning houses in urban areas.

Some of the policy interventions for the government are to mandate and ensure that all housing developers comply with regulations on the preservation and promotion of traditional architecture and establish a dedicated housing development and regulatory agency in the country.

‘The government shall establish mechanisms for rent determination and control for rental accommodations for uniformity,” the draft states.

The Ministry of Works and Human Settlement will implement the policy.

Yangchen C Rinzin

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