… corporate and private employees can also apply
In a major shift in its policy, the National Housing and Development Corporation Limited (NHDCL) will allow staff of corporations and private companies also to avail the privilege of affordable public housing facilities beginning April this year.
To avail this facility, according to the chief executive officer of the NHDCL, Rinchen Wangdi, an employee from low and middle-income household has to apply like any other civil servant.
“However, they will have to wait until March end since we need to revisit and upgrade our online application system,” he said.
As the main developer and operator of affordable units for civil servants in the country, NHDCL has revised rent for 2,445 housing units in 17 dzongkhags from January this year.
The management also removed the existing Class IA and IB from the affordable housing classification. “Unlike before, there will instead be open competition for allotment of these two categories as per the market rate,” CEO Rinchen Wangdi said.
There are 59 residential bungalows under Class 1A and 1B in Thimphu and allotted to senior executives, specialists, and professionals between grades 1 and 6 who pay between Nu 12,000 and Nu 21,000 as rent. With rent revision ranging from Nu 20,000 to Nu 30,000, henceforth, the tenants will have to pay 42 percent to 75 percent more.
The revision of rent varies with category. The house rent for category III in the four major towns of Thimphu, Phuentsholing, Gelephu, and Samdrupjongkhar is increased by 48 percent to 50 percent. This means a tenant who is paying between Nu 4,500 to Nu 5,400 a month will have to pay Nu 6,300 to Nu 8,400. In the same category, people occupying affordable housing units in other dzongkhags like Lhuentse, Trashigang, and Zhemgang, will have to pay rents between Nu 4,200 and Nu 5,500.
The maximum rent for categories four and five is fixed at Nu 4,200 a month.
However, the new revision will apply to new tenants only. “We will not apply to the old tenants as per the Tenancy Act and agreement signed between the tenants and NHDCL,” Rinchen Wangdi said.
As per the Act, the service provider is not supposed to increase rent for two years from the day on which a tenant occupies the house.
The capital city has the maximum low-cost housing units. Of the total 1,095 units in Thimphu, Chang Jiji colony has 674 units, mostly in category three where the rent starts from Nu 3,000 to Nu 4,500 for a two-bedroom apartment. There are around 150 units in categories four and five, which are meant for grades 10 to 17 and General Service Personnel (GSP) and Elementary Service Personnel (ESP).
NHDCL has 663 units in 11 housing colonies starting from Pasakha to Phuentsholing town. However, there will be no impact from the rent revision for residents living in 506 special housing units where the rent ranges from Nu 4,000 to Nu 7,000. “Since this housing facility was constructed for the low-income group who once lived across the border with subsidy from the government, the management decided not to apply the new rent revision,” Rinchen Wangdi said.
Samdrupjongkhar has 101 units, followed by Trashigang with 96 units and 56 units in Zhemgang. Paro has the lowest housing facility with two units.
The government began the construction of affordable houses in Chang Jiji as a pilot housing project in 2001.
Rationale for rent revision
Rinchen Wangdi said that the NHDCL has taken initiative to revise the rent and make it open for employees to avail the affordable housing facility for the first time after the company was delinked from Ministry of Works and Human Settlement in June 2011.
“Until now, the company has been following the rates fixed by the Ministry of Finance which was based on actual floor area and not on the actual cost incurred for the construction,” he said. “The expert group also recommended to rationalize the rent to make it sustainable for NHDCL and affordable for the low-income group.”
He said that the revision of rental costs will not exceed 30 percent of their monthly income. “The rent is highly subsidized and tenants would be still paying less compared to the rents of the private building,” the CEO of NHDCL said. “It is our core mandate to provide affordable and safe housing to civil servants and other corporate and private employees based on the eligibility of their post and income.”
Rinchen Wangdi said that they will encourage private employees whose monthly income is less than Nu 10,000 to apply for housing facilities of category five. A tenant can occupy NHDCL unit for 10 years.
“The eligibility criteria henceforth would be based on income and not position level or grade,” he said.
However, some observers pointed out that there should be a proper system of scrutiny so that the needy get the privilege. “Otherwise people owning expensive cars and houses in Thimphu would apply like what is happening at a low-income housing complex in Chang Jiji today,” one said. “Both spouses’ source of income should be looked into before allotting the apartment to the applicant.”
More affordable houses would be available from next year. The NHDCL is already in the process of constructing more than 120 buildings with 1,000 affordable rental-housing units in Thimphu, Phuentsholing, Samtse, Trashiyangtse, and Nganglam. All constructions are expected to be completed in 2024 and 2025.
Thimphu will have 110 to 120 units at nine different locations from Dechencholing, Jungzhina to Babesa.
The 2019 Revised National Housing Policy identifies affordability and homeownership as key goals. The policy recognises the importance of housing and the urgency of addressing increasing unaffordability, safety, and supply constraints.
With the revision of rent, meanwhile, the company’s rental income is expected to increase from Nu 137M last year to Nu 150M this year.
As of December 2021, the net block of the asset of NHDCL stands at Nu 4.6B as against Nu 3.682B in 2020.