Govt. to build 1,000 affordable housing units for middle and low income residents

Govt. to build 1,000 affordable housing units for middle and low income residents

Housing deficit has become critical especially for middle and lower income groups in urban areas with about 58% households residing in rented houses

The government will come up with 1,000 affordable housing units for middle and low income residents.

Works and Human Settlement Minister Dorji Tshering said 70% will be for the low income civil servants, while 30% will be for other low income and marginalized groups.

The minister added that about 50 to 60 units were constructed in Phuentsholing.

Meanwhile, in urban areas, housing deficit has become critical especially for middle and lower income groups with about 58% households residing in rented houses. 

Affordable housing refers to access to housing whereby an occupant pays less than 30% of their monthly household income towards rental expenses or servicing of mortgages or loans. However, a majority of the Bhutanese population faces moderate to severe rent burden as they pay more than 40% of their monthly household income. 

To make housing affordable, the ministry also aims to cut down the cost of construction, the MoWHS minister said. 

The urban population, meanwhile, has increased from 30.9% in 2005 to 37.84% in 2017 and is projected to rise to 56.8% by 2047 as per the population projections for Bhutan for 2017-2047. 

“Housing is the highest expenditure and the rent in urban centers is so high and it goes up to 40% of the monthly income of the residents,” Lyonpo Dorji Tshering said. 

He added that the ministry finds the housing in urban centers unaffordable given the expensive land cost in the urban centers, high lending rate of the housing loan and no proper construction mode. 

The minister said the government will lease state land for public housing development programs and to real estate developers for the development of affordable housing for the low and middle income groups. 

“For affordable housing, the cost of construction has to be brought down,” said Lyonpo, adding that the cost of construction materials gets high without having mass scale production of the building components.

 “If there is a mass scale production of doors or windows by manufacturers, the unit cost per component could be brought down and the government is encouraging the wood-based industries to take up the manufacturing of only doors or windows,” Lyonpo said.    

“For the construction of each building in Thimphu, the owner purchases their own building materials, for example bamboo and planks. They are discarded after the construction and these also shoot up the cost of construction,” said Lyonpo. 

“Instead of bamboo, one can buy steel props and steel shutters instead of planks that can be used several times,” Lyonpo said.

The minister said the ministry is also in discussion to increase the housing loan repayment period from 20 years.

Meanwhile, the Asian Development Outlook 2021 recommended the current tenure limit of 20 years should be extended to about 35 years, as in many countries. 

According to the National Housing Policy 2020, the main challenges faced by housing developers in the country are high cost of land acquisition and construction (materials and labor), expensive development finance; and developers’ inability to repay commercial housing loans even with high rental incomes derived from the housing properties.

Performance audits undertaken for housing development in 2018 for various agencies including the National Housing Development Corporation Limited (NHDCL) suggest that the NHDCL has so far created only 2,073 housing units against the 28,973 civil servants. 

Thukten Zangpo from Thimphu