Close to 50% of the population in Iranian metropolises are living in rented homes, a deputy roads and urban development minister said.
Mahmoud Mahmoudzadeh added that findings of the National Population and Housing Census in the year ending March 2017 show 31.7% of the country’s homes and 43.5% of those in Tehran are rented.
“Our experts believe households in the 4th to 7th income deciles will face growing housing difficulties in the absence of an appropriate response [on the part of the government]. Nevertheless, the ministry’s Housing Department is putting together a bill to regulate housing and rental markets,” he was quoted as saying by Fars News Agency.
The Ministry of Roads and Urban Development has come up with a roadmap to streamline the country’s tenancy market.
Taxing vacant homes, completing homes authorized for construction under the so-called Mehr Housing Plan, pressing ahead with the National Housing Initiative and introducing a professional home leasing system by forming property rental companies are short- and long-term plans on the ministry’s agenda, IRIB News reported last month.
Experts believe households in the 4th to 7th income deciles will face growing housing difficulties in the absence of an appropriate response on the part of the government
Currently, Iran has more than 2.6 million empty homes, 500,000 of which are in the capital city Tehran.
"The number of empty homes in Iran is three times the global average," he said, adding that the housing needs of Tehran’s residents would be met if 40% of empty homes enter the tenancy market.
“Like all other countries, a house must be considered a consumer good instead of a capital good. More than 75-80% of vacant homes across the country have been tracked,” he was quoted as saying by News.mrud.ir.
Due to the rise in home and rental prices, many investors in Iran have put their money in the real-estate market.
New and Old Housing Plans
Mahmoudzadeh noted that by speeding up the construction of a significant number of homes through the Mehr Housing Plan initiated by previous administration and delivering them to their owners by the yearend, renters will be able to move to their own homes.
This is while, according to housing experts, homes belonging to Mehr Housing Plan with no occupants account for a big share of vacant homes in Tehran Province.
In 2007, former president, Mahmoud Ahmadinejad, offered free land and cheap credit to contractors for providing two million low-income Iranians with housing units, which national project slowed down due to lack of finances.
Nevertheless, the new government-sponsored affordable housing development project, the so-called "National Housing Initiative", is aimed at supplying 400,000 affordable homes to the market.
Out of the construction of 400,000 homes planned as per the Roads and Urban Development Ministry’s new plan over March 2019-21, New Towns Development Company will build 200,000, the Urban Development and Renovation Company 100,000 and the Housing Foundation of the Islamic Republic of Iran will construct the remaining 100,000 residential units over three years.
Nearly 20,000 of these residential units will be constructed in new satellite cities, including 7,134 in Fouladshahr in Isfahan Province, 4,448 in Parand in Tehran Province, 2,762 in Golbahar in Khorasan Razavi, 1,547 in Sahand in East Azarbaijan Province, 1,497 in Sadra in Fars Province, 800 in Amirkabir in Markazi Province, 520 in Hashtgerd in Alborz Province and 150 in Pardis in Tehran.
Urban Home Rent Inflation at 23.2%
The average Consumer Price Index for home rents in urban areas in the year ending March 19 increased by 23.2% compared with the corresponding period of the year before.
The Statistical Center of Iran had put the annual inflation rate for the preceding quarter, which ended on Dec. 21, 2019, at 23.5%.
The highest and lowest average annual inflation rates were registered for Lorestan and West Azarbaijan provinces with 34.2% and 10.1% respectively.
According to the SCI report, CPI for rent levels in urban areas (using the Iranian year to March 2017 as the base year) stood at 169.3 in winter (the fourth quarter of the last Iranian year: Dec. 22, 2019-March 19), indicating a 4% increase compared with the previous quarter.
SCI had put the quarter-on-quarter rent inflation rate for the preceding quarter, which ended on Dec. 21, at 7.2%.
Semnan and West Azarbaijan provinces registered the highest and lowest quarter-on-quarter inflation rates for tenants in urban areas with 7.7% and 0.6%, respectively.
The consumer rent price index in urban areas increased by 22.9% in Q4 over the same quarter of the year before.
SCI had put the year-on-year rent inflation rate for the preceding quarter, which ended on Dec. 21, at 21.6%.
The highest and lowest rates on a YOY basis in the fourth quarter of the last year were registered for Lorestan with 35.7% and West Azarbaijan with 9.4%.
Hessam Oqbaei, the deputy head of Tehran Association of Realtors, has said the rise in rent levels won’t keep up with average inflation this year (March 2020-21).
“More than 37% of the population of urban areas don’t own the home they are living in and are usually government employees from low- and middle-income households. Their pay rise this year was up to 22%, which makes it impossible for them to afford higher rent increases. Last year, we saw home prices rise by up to 100% and rents by 30%; rent increases higher than the average inflation rate are not on the cards, at least for the first half of the current year [March 20-Sept. 21],” he was quoted as saying by IRNA.
According to CBI's latest report, the price of rented residential units in Tehran and across all urban areas increased by 28.5% and 31.3% respectively during the second month of the current year (April 20-May 20) compared with the similar month of last year.
