The pressing need for home loans

One of the biggest casualties of the rupee and credit crisis was the crushing of many ordinary Bhutanese families’ dreams and plans to own their own home.

While the Central Bank’s decision to curb loans for big commercial buildings meant to be given on rent was understandable, the decision to restrict all categories of housing loans was harsh.

This is because apart from food and water one of the most basic fundamental human rights is the right to housing or a secure roof over ones head.

Most Bhutanese families are content to have a traditional Bhutanese house, cottage or an apartment as their home and don’t necessarily have big real estate aspirations.

The RMA and the government far from providing affordable housing to its citizens were actually denying them even the opportunity to build their own homes.

It is in this light the Ministry of Finance’s proposal to open up home loans for residential purposes is a most welcome initiative that must be supported by all stakeholders.

The current phenomena is that some mainly well off and lucky people who have inherited property or built buildings and mega structures in the past are the prime beneficiaries as most people in the absence of credit cannot build their dream homes.

Bhutan cannot be a country of perpetual landlords and tenants and it cannot have an economy based on rent collection.

Opening up home loans make sense even from the credit point of view. Apart from the obvious case of rights and needs the RMA can restrict the size of home loans to manageable bites unlike mega housing loans. Home loans also consume only a small portion of the resources and imports that a commercial building does. Building small homes also gives the owner an option of using local materials which many do unlike big building constructions that are more reliant on imports.

The government and Central bank should be well aware that restricting home loans will lead to strong socio-economic implications in the future. The ground reality is that the Bhutanese population and family units are growing and can no longer stay under the same roof due to space constraints, migration etc.

Denying a whole generation the option of building affordable housing and instead keeping them at the mercy of a few volatile landlords is not a viable option.

To make the point even more clear the 2013 elections was all about the economy and nothing stung the masses more about the state of the economy than the fact that they could no longer avail credit to own their own home. While people can make do without cars owning one’s own home is everybody’s dream from a pauper to a millionaire.

Ever since the economic crisis emerged in 2012 there have been more studies and a more thorough understanding of the nature of the crisis. The initial simplistic argument that the crisis was caused just by imports in some sectors of the economy does not hold water anymore. The economic crisis has been caused by a variety of causes which include government expenditure and also the uncontrolled auxiliary demand of hydro projects.

This is one of the main reasons as to why the economy has not seen any significant improvement despite credit and import restrictions.

If the current situation of addressing our economic woes by restricting home loans continues then one day we may even have to stop importing basic food items.

The solution to the economic crisis include a host of measures that include increasing our exports and creating a substitute for our imports, not giving up and denying even the most basic needs of citizens.

“Home is the nicest word there is.” Laura Ingalls Wilder

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