Housing is a basic and fundamental human need, yet millions are caught in the struggle to have a roof over their head in Pakistan. Realizing the gravity of the problem and appreciating the fact that housing is not only a social need but a productive sector of the economy, the Government directed the Ministry of Housing and Works to formulate a viable and effective housing policy and submit its recommendations. A Housing Advisory Board of nearly 40 members, half of them from the private sector was constituted. It included all stakeholders comprising of builders, constructors, development agencies, bankers, town planners, Provincial Governments, HBFC and State Bank, etc. The Board functioned as an honorary body with no financial support from the Government. A number of meetings were held with open and frank discussions to ensure that a practical and realistic policy is formulated.

Multifarious problems including housing shortage, lack of housing finance, non-existence of foreclosure laws, lack of planning, outdated building, and zoning regulations, etc. were discussed and debated before finalizing the policy. The National Housing Policy was approved in principle by the President and Chief Executive during a presentation made by the Ministry of Housing and Works on the 22nd of June, 2001. The major emphasis of the policy is on resource mobilization, land availability, incentives for homeownership, incentives to developers and constructors, and promotion of research and development activities to make construction cost-effective. The objective is to create affordability, especially, for the middle and low-income groups. One of the cornerstones of the Policy is to ensure the development of housing for the poor and needy and housing for the majority rural population through the use of different instruments like free land, cross-subsidy, and concessionary finance, etc.