The relief, offered in view of rising cost of living, will be applied uniformly to employees from grade 1 to 22.
The federal government has approved an 85% increase in the maximum housing rental limit for federal employees, according to official sources. The decision was endorsed by the federal cabinet on a summary presented by the Ministry of Housing and Works.
The revised cap will apply uniformly to employees from grade 1 to grade 22, offering relief from rising cost of living. Sources said the increase will benefit hundreds of government employees, although it is expected to impose an additional annual burden estimated at Rs 12 billion on the national exchequer.
The move is part of a broader review of government allocations to adjust compensation in line with inflationary pressures and market housing rates.
Read: This is how much advance pay federal employees can receive under the new rules
Earlier on Thursday, the Finance Ministry unveiled the Federal Government Receipts and Payments Rules 2025, a new policy that entitles federal government employees to an advance payment for housing construction.
According to an official memo, employees from grades 1 to 16 are classified as “staff”, who can now get an advance for housing construction equivalent to 36 months of their base salary. Officers of grade 17 and above will be entitled to an advance equivalent to 24 months of their basic salary.
The ministry stated that payments will be processed according to the 2025 rules whenever applications for advance payments for housing construction are submitted.
The combined revisions to appropriations and loan eligibility are intended to ease financial pressure on government employees at a time of persistent inflation and skyrocketing housing costs.
