SECP grants three house financing licences in FY2021

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has licenced three new housing finance companies during the last fiscal year of 2020/21 after one decade, it said on Wednesday.

SECP said a revitalised house finance companies (HFC) will contribute in catering the huge demand of affordable housing finance in the country.

The newly licenced HFCs include Pakistan Housing Finance Company Limited, Trellis Housing Finance Company Limited and Asaan Ghar Finance Limited. Prior to that, there has been no licenced HFC in existence, for the past one decade.

“While cognisant of the huge gap in affordable housing finance space, the SECP in collaboration with Pakistan Mortgage Refinance Company and the World Bank Group started a comprehensive awareness campaign to highlight the opportunities for potential new entrants to tap this vast underserved market.”

The World Bank said housing finance in Pakistan is particularly low with a mortgage-finance-to-GDP ratio one of the lowest in South Asia.

Overall access to financial services also remains limited and that the financial sector has a limited role in contributing to sustained and inclusive growth and dealing with the increasing housing shortage. The gender gap is also high, with 21 percent of men compared to only 11 percent of women having access.

“The quantitative housing shortage is exacerbated by qualitative deficits such as overcrowding, low quality, and continuous deterioration. Around 47 percent of urban households live in substandard housing, often located in informal settlements called Katchi Abadis, which lack basic urban infrastructure and have poor health conditions. The existing housing stock is also extremely overcrowded.”

A number of webinars were conducted to impart information on regulatory framework and legal requirements to form a HFCs.

The SECP also guide prospective investors on available funding mechanism for housing finance companies and assisted them in preparing workable HFC business models. The SECP also supports the proposal to include the HFCs in government’s markup subsidy scheme for housing finance.

The initiatives translated into three new entrants into the housing finance market, who are expected to commence operations during the current year.