Federal Government enhances rental ceilings for hired accommodation across major cities

ISLAMABAD:  The Federal Government has approved a significant upward revision in the rental ceilings for hiring residential accommodations for federal employees in Islamabad and other major cities, including Rawalpindi, Lahore, Karachi, Quetta, and Peshawar.

The revised ceilings, announced through an Office Memorandum issued by the Ministry of Housing and Works, will take effect from November 1, 2025.

According to the notification, the enhancement aims to bring government rental ceilings in line with prevailing market rates and will apply to all fresh hiring cases and to those where existing leases have expired.

Under the new structure, the rental ceiling for employees in Basic Scales (BPS) 1–2 in Islamabad has been increased from Rs. 7,029 to Rs. 13,004, while for BPS-22, it has been raised from Rs. 98,444 to Rs. 182,121. For other specified stations, including major provincial capitals, the ceilings have also been substantially increased—from Rs. 6,591 to Rs. 12,193 for BPS 1–2, and from Rs. 89,230 to Rs. 165,076 for BPS 22.

As per details, under the revised structure, officers in BPS 1–2 will now receive a ceiling of Rs. 13,004 in Islamabad and Rs. 12,193 at other specified stations, up from Rs. 7,029 and Rs. 6,591 respectively. For BPS 3–6, the ceiling has been enhanced from Rs. 10,980 to Rs. 20,313 in Islamabad and from Rs. 9,654 to Rs. 17,860 elsewhere. Similarly, for BPS 7–10, it rises to Rs. 30,346 in Islamabad and Rs. 27,162 at other stations. Officers in BPS 11–13 will now be entitled to Rs. 45,776 and Rs. 39,705, respectively, while those in BPS 14–16 will receive Rs. 57,507 and Rs. 50,198. For BPS 17–18, the ceiling jumps to Rs. 76,122 in Islamabad and Rs. 66,411 at other locations. In the higher grades, the revised ceilings are Rs. 101,202 and Rs. 86,610 for BPS 19, Rs. 127,095 and Rs. 109,296 for BPS 20, Rs. 152,183 and Rs. 131,548 for BPS 21, and Rs. 182,121 and Rs. 165,076 for BPS 22. This revision reflects a substantial increase in rental allowances across all pay scales, aligning official housing benefits with prevailing market rents in major cities.

The revised ceilings will also apply in cases where allottees are paying rent differentials from their own resources. In such instances, the rent may be increased up to the owner’s demand or the occupant’s revised rental ceiling, whichever is lower.

Furthermore, cases of houses hired under Rules 8(i) and 9(i) of the Accommodation Allocation Rules, 2002 — whether leased from private owners or on self-hiring basis — will also be eligible for rent enhancement in accordance with the new ceilings.

The memorandum specifies that the enhanced rates will not result in additional budgetary allocations, and ministries and divisions will meet the increased expenditure from their existing financial provisions for the fiscal year 2025–26.

The notification, signed by Section Officer (Policy/E-III) Yawar Hussain Rana, follows approval from the Finance Division and the Cabinet Division, reflecting the government’s intent to rationalize official housing compensation in light of rising market rents.