Govt approves 85% increase in house rent ceiling for federal employees

Relief, offered in view of rising living cost, will apply uniformly to employees from Grade 1 to 22

The federal government has approved an 85% increase in the house rental ceiling for federal employees, 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 ceiling will apply uniformly to employees from Grade 1 to Grade 22, offering relief in the wake of rising living cost. Sources said the increase will benefit hundreds of government employees, though it is expected to impose an estimated Rs12 billion additional annual burden on the national exchequer.

The move is part of a broader review of government allowances to adjust compensation in line with inflationary pressures and market housing rates.

Read: Here's how much advance salary federal employees can take under new rules

Earlier, on Thursday, the Ministry of Finance unveiled the Federal Government Receipts and Payments Rules 2025, a new policy that entitles federal government employees to a house building advance.

According to an official memorandum, employees from Grade 1 to 16 are classified as 'staff', who may now obtain a house building advance equivalent to 36 months of their basic salary. Officers in Grade 17 and above will be eligible for an advance equal to 24 months of their basic salary.

The ministry stated that payments will be processed according to the 2025 rules whenever applications for house building advances are submitted.

The combined revisions to allowances and loan eligibility are aimed at easing financial pressure on government employees at a time of persistent inflation and soaring housing costs.