Low cost housing

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Among the worst problems faced by the urban population, is the acute housing shortage. This shortage specially affects people of middle income and low income groups. They have to rent dwellings at costs very disproportionate to their income. In fact, the greater part of the earnings of these people is devoured by the need to pay rent on a monthly basis.
This situation could be much different if these groups of people who are the majority in the urban population, could have access to house financing or mortgage lending on easier terms and conditions. In that case, the pressures on their life and living would much ease from their owning or building their own homes and paying for the costs of building or ownership in bearable instalments on a long term basis. Indeed, such facilities for house ownership exist in the developed countries and in many developing countries that enable even their common people to become home owners by paying for the same gradually without feeling so much under a pressure. But Bangladesh's housing finance continues to be monopolised by people in the high income brackets. The takers of such finance can afford to service their debts at rates of interest ranging from 14 to 15 per cent and completing the payment cycle within maximum 15 years. Understandably, the middle and lower income groups consider it a sheer impossibility to borrow on such terms and conditions and to viably go on repaying their loans.
The housing needs of the lower segments of the urban population call for special arrangements and a seminar recently organised by the World Bank was devoted to the issue . In his address to the seminar, the Adviser for Finance observed that the country's mortgage lending system is not a well developed one and its main inadequacy is bypassing the needs of those who are most acutely in need of such financing. Many ideas were floated in this seminar and the same need to be considered promptly and materialised to give a spur to low cost housing in the country. Developers in the main cities of the country are doing a good job of catering to the housing needs of the affluent sections of the population. They are serving to customers who can buy apartments or houses for which they have resources to pay either in the short term or the longer term. But the non affluent people in the cities certainly are in need of housing finance on particularly easy terms and conditions and it is in this area that institutions such as the government itself and donor agencies can come together to provide a solution.
The government of Bangladesh (GOB) can take the initiative to create a special fund for housing schemes for the middle and lower income groups. This fund can be bolstered with finance received from donor bodies such as the World Bank (WB), Asian Development Bank (ADB), the International Finance Corporation (IFC) and others. These donor organisations usually provide loans at 1.0 or 2.0 per cent interest rates spread over 30 or even 50 years in some cases. Thus, funds received from these sources can easily be disbursed to low income groups at interest rates of no more than 3.0 or 4.0 per cent and repayment schedule can be spread over a period of 30 or 40 years. The doing of this will meet the needs of housing finance of non affluent people at bearable interest rates as well softer terms of repayment. The GOB can also operate this housing schemes by building apartments on its own lands by utilising this fund and then mortgaging the same among willing takers. The costs of home ownership are likely to fall even further with this approach. What is most important is to press ahead with such plans at the fastest. Not only the urban areas, systematically all areas of the country or the rural areas need to be brought under a low-cost housing finance system.