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High-end flats being constructed by Tata on Naadhee land at Sosun Magu.Photo/Dhauru

Government proposes housing policy changes; savings scheme

Fahi Dhiriulhun Corporation (FDC) is constructing 4,000 flats in Hulhumale' under the government's housing scheme.

7 November 2022

By Ahmed Naif

Government has proposed to make policy changes to its housing schemes along with the introduction of a savings scheme for individuals to save for equity contributions for housing loans.

In the national budget presented to parliament for 2023, a significant percentage of the government's borrowings are for housing loans and guarantees given to them. It has been observed that repayment of these loans has become a huge burden on the government. 

According to the budget proposal:

  • The total of the loan amounted to $1 billion (MVR 15.4 billion)

  • Since these loans are not concessional or soft loans, repayment is a huge burden

  • Loans cannot be repaid from rental income of housing schemes; so we have to depend on the government's budget to repay the loans

  • MVR 1 billion has been paid for housing loans in this year's budget

For these reasons, the government intends to make changes in the way the housing project is implemented. The main aim is to introduce housing at different levels based on the percentage of income and increase the participation of the private sector in housing schemes with the government.

The government's plans include:

  • Drafting a new tenancy bill, to identify specific categories of social housing

  • Providing housing in partnership with the private sector for high-income groups

  • Reduction in interest on housing loans

  • Introducing a savings scheme for the general public to match the equity they have to pay for loans

The government is also planning to introduce other changes next year, such as making it easier to own a unit in buildings, the budget proposal said. 

Fahi Dhiriulhun Corporation (FDC) is constructing 4,000 flats in Hulhumale under the government's housing scheme. Some 2,000 additional flats are being constructed by private companies.

Reducing interest rates on housing loans has been one of the presidential promises of this government.

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