Federal Government Approves 85% Increase in House Rent Ceiling for Employees 2025
The federal government has approved a massive 85% increase in the house rent ceiling for federal employees, a long-awaited relief amid rising inflation and soaring housing costs across Pakistan.
According to official sources, the decision was endorsed by the federal cabinet on a summary moved by the Ministry of Housing and Works. The revised rent ceiling will be applicable to all federal employees from Grade 1 to Grade 22, ensuring uniform benefit across all pay scales.
Relief for Thousands of Government Employees
The revision will provide financial relief to hundreds of government workers, who have faced increasing pressure from high rental rates in major cities such as Islamabad, Lahore, Karachi, and Peshawar.
However, the adjustment will add an estimated Rs12 billion annual burden to the national exchequer, according to the ministry’s assessment.
Summary of Key Changes
| Category | Previous Ceiling (Approx.) | New Ceiling (After 85% Increase) | Beneficiary Grades |
| Lower Staff | Rs 10,000 | Rs 18,500 | Grade 1–16 |
| Officers | Rs 20,000 | Rs 37,000 | Grade 17–22 |
| Estimated Fiscal Impact | — | Rs 12 billion annually | — |
Linked to Broader Compensation Reforms
Officials said this decision is part of a broader review of government allowances to align employee compensation with market housing rates and inflationary trends.
WhatsApp ChannelIn addition to the rent ceiling hike, the Ministry of Finance has also unveiled the Federal Government Receipts and Payments Rules 2025, which introduce new house building advance facilities for government employees.
New House Building Advance Policy
Under the new policy:
- Employees from Grade 1 to 16 (classified as staff) can now apply for a house building advance equal to 36 months of their basic pay.
- Officers in Grade 17 and above are eligible for an advance up to 24 months of their basic pay.
The Finance Ministry stated that payments for the house building advance will be processed under the new 2025 rules whenever applications are submitted.
A Step Toward Easing Inflation Burden
Government sources described the move as part of the administration’s ongoing efforts to ease the financial strain on public sector employees, who have been hit hard by rising living costs and housing shortages.
Economists say that while the measure will provide short-term relief to federal workers, it will also add fiscal pressure on the government’s budget, already stretched by subsidies and inflation-linked wage adjustments.
