The government has introduced major changes to the housing system for public sector employees, transferring the authority to arrange residential accommodation to individual ministries and departments under a new policy that took effect on February 11, 2026.
Under the revised framework, public servants will now arrange private housing themselves instead of relying on government-allotted residences. The policy will be implemented in six major cities, including Islamabad, Lahore and Karachi, where employees will be allowed to secure homes on a three year lease.
One year’s rent will be paid in advance under the scheme, while the responsibility for paying utility bills will rest with the allottee.
Key features of the new policy
According to the official notification, in cases where both husband and wife are government employees, only one spouse will be eligible to receive the house rent facility. Special conditions have also been introduced for contract employees. The policy further allows house rent in rural areas to match the rates applicable in urban centres, aiming to ensure uniformity across regions.
Officials said the changes are intended to streamline the housing system and give departments greater control over residential arrangements for their staff, while also encouraging employees to secure accommodation suited to their needs.
The latest move follows an earlier decision taken in November 2025, when the federal government approved an 85 percent increase in the house rental ceiling for federal employees. The decision was endorsed by the federal cabinet on a summary moved by the Ministry of Housing and Works.
The revised ceiling applied uniformly to employees from Grade 1 to Grade 22, offering some relief at a time of rising living costs. Officials said the increase was expected to benefit hundreds of government employees, though it would place an estimated additional annual burden of about Rs12 billion on the national exchequer.
The increase formed part of a broader review of government allowances aimed at adjusting compensation in line with inflationary pressures and prevailing housing market rates.
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