The average residential rent in Iran’s urban areas has increased by 46.4% in the ninth month of the current Iranian year (Nov. 22-Dec. 21) compared with the similar month of the year before, according to the latest data released by the Central Bank of Iran.
The rise in rent levels stood at 41.3% in Tehran, the capital city.
The changes were reportedly 2.5% and 3% for Iran’s urban areas and Tehran respectively compared to the previous month.
Government officials began to enforce measures to control the ever-rising housing rents in early 2020, such as setting a cap on the rise for three years in a row.
The heads of three branches of power have set a rent ceiling for the current year (started March 21) as well. However, according to available data, the measure has not been successful and rents have continued to rise regardless of the cap.
Explaining the rental housing market’s failure to comply with the cap on rent, Nasser Zakeri, an economist, made the following statements to the Persian newspaper Shargh:
The guideline might have countless loopholes, enabling real-estate agents or landlords to end run the rules and impose their diktat on tenants. You can’t deny these loopholes, but three years since the implementation of this law, authorities should have had identified these loopholes and improved the guideline.
Some people might argue that the interference of the government is a wrong, inefficient policy and prices are not at policymakers’ beck and call.
Two points should be mentioned here: first, the rental housing market is less susceptible to price changes compared with other markets. Suppliers of housing don’t stop making investment in production and supply in the medium term even when the law bans a price increase. In addition, the decline in investment is not necessarily a negative factor in the long term; it might be the result of the exit of speculative investment from the market.
Second, government interference in the market does not equate with distancing from the standards of free market economy and imposition of restrictions on businesses; it is akin to the government’s fight against the hoarding of essential goods. Housing is similar to an essential commodity, as it affects the lives and welfare of citizens. To safeguard the dignity of people, housing should not be attacked by the components of free market.
Lack of legal binding allows landlords to pay no heed to the rent increase cap. The absence of efficient supervision (and not the loopholes or ineffectiveness of government intervention) is to blame for the unconscionable increase in rents during recent months. As a result, landlords keep raising rents without worrying about the consequences.
The persistence of such a situation will promote the idea that tenants are alone and unprotected in the market, and the authorities have left them in the lurch, by only giving moral advice to landlords.
A short-term solution could be the establishment of a strict supervision system to control rent increases and punish those asking higher than permitted rent growth. The move would also improve the image of government as an authoritative institution, one which is aware of what’s going on in the society.
