1. Economic Empowerment of Shelter-less
August, 2008

2. HBFC’s Response to Social Housing Issue

3. Platform for: Micro Housing Supply (Social Housing Company)
Micro Housing Finance (Social Housing Bank)
Economic Empowerment of Shelterless for a Shelter (Sponsor a Shelter Foundation)

4. Housing Continuum Commercial Banks Market HBFC (SMH) Social
Housing Finance Player
Market Segment
Income Distribution
Mortgage Affordability (Rupees in Million)
HBFC
(SMH)
HBFC & Social
Housing
Bank
Social
Market
High End
Upper Middle
Lower Middle
Small
Micro
Upto Rs.4,000
Housing Market
Rs.100,000
Rs.25,001 to
Rs.50,000
Rs.10,001 to
Rs.25,000
Rs.4,001 to
Rs.10,000
Rs 5.0 & above
Rs ~ 2.50
Rs 0.5 ~ 1.25
Rs 0.20~Rs.0.50
Up to Rs 0.20
Rs 1 Lac & above.
High - High
Rs 2.5 to Rs 5.0
Income Distribution in %
4 %
15 %
20 %
40 %
1 %
Per Capita Income Rs.5,000 per month
Minimum Wage Rate Rs.6,000 per month
Housing Shortage * (In Million)
0.300
1.125
1.500
3.000
0.075
Total existing backlog is estimated at 7.5 Million units. The shortage in various income segments is assumed in the same proportion, as per income distribution pattern.
Actual shortage is much higher in low income segments as opposed to higher income segments in social housing support.
Backlog in Social Housing Segment 4.5 one units

5. Social Housing Company
Micro Housing Supply Platform
Social Housing Company

6. Social Housing Company-SSC (Proposed)
A Social Housing Company is being promoted by HBFC, SAIBAN, Acumen Fund etc to design and develop low cost housing projects.
Social Housing Company is to promote affordable housing facilities to low-income groups and less privileged sections of the society.
The idea has been encouraged by the Government in stimulating housing for the very needy and very poor.
Nearly 55% of urban population is living in Katchi Abadis. Situation in other major cosmopolitans like Lahore, Peshawar etc is the same.
The Social Housing Company is to be sponsored by institutions like HBFC, and other financial institutions/ banks in association with NGOs like SAIBAN, Khuda-ki-Basti.

7. Social Housing Company - SSC (Proposed) Contd…
The basis of programme is to provide housing support to poor and needy on the concept of “Incremental Housing”.
HBFC has already supported such projects in Karachi and Lahore, i.e., Khuda ki Basti
HBFC is expecting allotment of 100 Acres of land in Karachi to initiate another such projects.
Such projects in the future will be floated through the platform of Social Housing Company.
More such micro housing companies will be encouraged as private sector initiatives.

8. Social Housing Company - SSC (Proposed) Contd…
The initial capital of the company would be Rs.125 million.
Initial capital will be contributed mainly by HBFC alongwith, International Housing Finance Ltd., Acumen Fund (New York) Saiban.

9. Management, Marketing and Technical Support
Social Housing Company Program Structure
Land for Housing
City Govt. to provide state land for housing OR
Hard to be procured from
the market
Project Management
Social housing company to manage projects
Construction can be outsourced to developers.
Sales to be handled by Company.
Housing Finance
Provided by banks, facilitated by Company.
Other Support * Local urban development NGOs to provide technical and marketing
support/monitoring
Government
Private Investors/
Donors OR
Provide state land
Land for Housing
Land purchase financing
Social Housing Company Project Manager
Banks
NGOs
Management, Marketing and Technical Support
Facilitate housing finance
Low Income Households

10. Social Housing Company Case Study of a Model Project

11. SSC Case Study Product Features
Target Market:
Households making Rs. 5,000 – 10,000/month
Located in city suburbs where basic civic amenities is provided.
Plot sizes of 65 – 120 sq. yards.
Unfinished basic housing units (1-2 rooms, kitchen, latrine, boundary wall)
Essential utilities (electricity, water supply, sanitation, roads)
Social amenities (clinics, schools, parks) and income generation programs)

12. SSC Case Study Product Features (Contd…)
Target Market: Households making Rs. 5,000 – 10,000/month
Approximate Pricing
Land
(100 sq.yds.)
Development
(E, W/S, S, R)
House Construction **
(1-3 rooms)
Total Unit Price
Rs. 40,000
Rs.80,000 to 160,000
Rs.160,000 to 240,000
Down-payment of Rs.60,000; Housing finance of Rs.100,000 – 180,000
** Based on incremental housing concept

13. SSC Case Study Basic Loan Structure
Down Payment
Target clientele can make down-payment of between Rs.60,000 – 100,000.
Saiban survey of 120 low-income households (Rs.5,000 – 10,000 monthly income) in Lahore reveals that 73% could pay Rs.70,000 or more as down-payment.
Typical Unit Price
(Plot+2R House)
Client Down Payment
Bank Loan
Rs.200,000
Rs.60,000 to 90,000
Rs.110,000 to 140,000

14. SSC Case Study Basic Loan Structure (Contd…)
Monthly Installments
Target clientele can make monthly loan installments of Rs.1,200 – 2,000 for a 20 year loan
Option for a shorter period can also be given.
Saiban survey reveals that average rent of respondent households was Rs.1,800 while over 50% of household participated in informal savings group.

15. Loan Application Review
Program will allow banks to target low-income segments at
lower costs.
No risk of fraudulent property documents and one-time collateral legal assessment.
Bulk property evaluation.
Housing company can also assist in selecting potential borrowers.
Preliminary field visits to pre-screen applicants.

16. Micro Housing Finance Platform
Social Housing Bank

17. Social Housing Bank (Proposed)
To meet the financing needs of low income housing segments, HBFC is supporting micro housing finance program under following institutional framework:
Setting up a Social Housing Bank (SHB) with a capital of Rs.500 mn. under micro finance banking regulations.
The Social Housing Bank will be setup under regulatory regime of micro finance banks (SBP)
HBFC, through the platform of Social Housing Bank will promote Social Housing Company (SHC) for design, development and management of low cost housing projects. The Social Housing Company is being set up with a capital base of Rs.125 mn.in collaboration with an NGO (SAIBAN) and another organization.
The institutional set up will have to be commercially sustainable so as to motivate private sector to enter into this field.

18. Social Housing Bank (Proposed)

19. Sponsor a Shelter Foundation
Platform for Economic Empowerment of Poor (Shared responsibility of the society and the state)
Sponsor a Shelter
Foundation

20. Sponsor a Shelter Foundation Public support program through Zakat and Donations for enhancing mortgaged payment capacity of low income borrowers.
HBFC being a housing finance institution, specializing for low and middle income groups of the population, is fully conscious of the fact that due to property price escalation during the last few years, even low cost housing has gone beyond the affordability of low income people.
HBFC being socially responsible, caters to housing finance needs of low and middle income groups of population. Any support to enhance mortgage affordability of the poor is the responsibility of society at large and any institutional mechanism for this has to be through a separate entity, outside HBFC.
Therefore, to support these people and to enhance their mortgage affordability, a program “Sponsor a Poor for seeking Shelter” is proposed to be launched where a poor borrower may be required to make a part of the mortgage payment, whereas the balance will be from the Foundation through contribution of Zakat and/or individual/corporate Donations more..

21. Sponsor a Shelter Foundation Contd…
Eligibility for such poor and needy will be determined through a transparent mechanism of the Foundation and the amounts will be limited within its financial resources.
It has been checked with the religious scholars that such a support program is perfectly eligible for Zakat.
Initial response is positive from various corporates, philanthropists and overseas Pakistanis to make their Zakat contributions/ donations for the purpose.
HBFC is in a very comfortable position to ensure that the recipient is a very deserving case and the contributions are being applied towards reduction of loan obligations. Since the objective is a very noble one, of providing shelter to the poor and needy, it is expected to receive a good response.
HBFC would only recommend deserving cases to be assessed by the foundation. The Foundation would approve/disapprove requests for financial support on merit, as per its own laid down criteria.

22. Sponsor a Shelter Foundation Contd…
Through “Foundation” we propose to take charity and social service outside HBFC.
Initial Resources: (Rs. In Mn).
HBFC’s …………………………………… *
Zakat Foundation, …………………………
Corporates, Individual. ……………………… 1,000
Total ,000
* HBFC will contribute this amount from a special fund at HBFC, which can be used only for charity and social cause.
Corporate and Individual donations will be tax exempted.
Management of Foundation will be a combination of public and private sector nominees.

23. http://www.hbfc.com.pk info@hbfc.com.pk
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