The Supreme Housing Council recently set a virtual ceiling for the rise in housing rent, which follows the same formula as the resolutions of the heads of the three branches of powers in the last four years.
The council has considered a rate of 25% for the growth of rent in Tehran, as the most important part of the country's rental housing market, Nasser Zakeri, an economist, prefaced an article for the Persian newspaper Shargh with this note. A translation of the text follows:
It is an indisputable requirement to prevent the excessive growth of rents, which has adversely impacted the economy of low-income households.
The rise in rent levels is problematic, as 40% of the country's urban population feels its negative consequences. Ignoring the suffering of this huge population can even undermine security. Therefore, the government's action and decision to regulate the rental housing market as a wise decision is commendable.
Since the beginning of the fiscal 1398 [early 2019], when the topic of determining and notifying the permissible ceiling of rent increase was raised, a suitable executive guarantee was not considered for this notification. Therefore, it was not far from expectation that the rental housing market would not pay attention to the notification that was reduced to the level of a moral recommendation. The result of this negligence was that in the last four years, the rate of rent growth in Tehran has actually been around 45% instead of the authorized 25%. Therefore, it is imperative for the authorities not to consider their duty fulfilled just by announcing the "permissible ceiling". They should take measures for the implementation of this latest notification as soon as possible so that it does not suffer the fate of the ineffective announcements of the past four years.
In the last four years, the institutions in charge have never submitted a report on the state of the rental housing market and the effectiveness of the notifications and how to monitor this market. Therefore, it is necessary for the president to oblige officials of the housing sector to submit a monthly report on how to implement the notification and deal with violators. Naturally, this report should not be considered confidential and is published in the media for the information of citizens.
In the last four years, a group of owners decided to comply with the approved ceiling, but most of them did not pay attention to the approval. In calculating the current year's rent, last year's rent levels are the criterion, naturally the second group will have better conditions than the first group and will earn a higher income. It is not inappropriate to think of measures to honor the first group or impose fines on the second group in the formulation and regulation of supplementary guidelines. Such a plan will be closer to justice.
In the past few years and with the narrowing of the field for tenants, many people wondered about the reason behind the negligence of the officials and trustees of the housing sector towards the problems of tenants. Is the reason just ignorance or indifference, or are they themselves part of the group of rental housing owners?!
Under the circumstances, it is expected that all the officials involved in the housing sector will clearly explain their position to the people whether they are part of the rental population, rented their properties, or adhered to the ceiling in the last four years? Have they respected the rent level or not?!
Dealing with the housing crisis, considering its wide dimensions, requires deliberate measures in the form of a long-term plan. However, the special conditions of the society and the suffering imposed on the growing population of tenants require effective measures for reducing the livelihood difficulties of this large group of society. Determining the permissible ceiling of rent increase and seriously monitoring its implementation are the most useful measure that can be implemented in the short term.
Other measures can also be employed along the way. For example, requiring the owners of empty houses to offer these units in the market for sale or rent, reducing transaction costs imposed on tenants, allocating low-cost loans to tenants can reduce the pressure imposed on the latter.
One of the first positive effects of the policy of limiting rent growth is to help curb speculative demand in the housing market. In the past decades, the excessive growth of speculative demand for housing has hard hit the national economy and caused many anti-developmental problems, such as the spread of poverty, the weakening of the productive sector and the promotion of brokering.
The decrease in the income of rental properties will gradually convince people with high liquidity, who have rushed to the housing market in the past years with the aim of gaining more profit, to use their capital in other sectors of the economy, especially the production sector.
In conclusion, as rent control threatens the interests of a small but powerful group, they will try to scuttle this plan. It is hoped that statesmen, especially the president, will not allow the interests of a small group to be preferred over the interests of the entire society.
