Conflict of interest is a blight on governance, as it affects many economic sectors, housing in particular.
The rise in urban land prices followed the rapid growth of home prices in the 1970s. This turned urban land into a commercial commodity, resulting in wide-scale public investment. The process came to a halt in the first decade following the Islamic Revolution of 1979, but regained momentum in the 1990s. Over the past three decades, it has had deleterious effects on the national economy and the livelihood of low-income households.
Nasser Zakeri, an economist, prefaced his write-up for the Persian daily Shargh with this note. A translation of the text follows:
A glance at the current economic conditions will show the consequences of heating up the urban real-estate market. It is divided into two groups of the privileged and the underprivileged. Having the privilege to receive big loans from banks and the connections to buy prime real-estate at special discounts has made the privileged class richer. At best, ordinary people have managed to buy a home for their personal use, while many citizens, especially the youth, are presently deprived of having a place of their own to live independently.
Economic relations of today’s society can be compared with the olden relations between lords and serfs: in that era, the ownership of agricultural lands differentiated the lord from the serf; at present, it’s the ownership of urban lands.
There is no doubt that the continuation of this situation and the justification of these relations are not acceptable, as they have adverse impacts on the national economy. However, government officials remain inactive and only make a move when the interests of the privileged is threatened, either while approving a law [in the parliament] or enforcing the law [in the governorate and municipalities].
Having the privilege to receive big loans from banks and the connections to buy prime real-estate at special discounts has made the privileged class richer. At best, ordinary people have managed to buy a home for their personal use
The following points show the truth of this claim:
In recent years, the government has focused on increasing tax revenues to offset the budget deficit. However, the process of approving tax on real-estate has been carried out slowly, which protects the interests of the privileged.
The excessive increase in rents compelled the government to set a ceiling on their growth. However, the decision by the heads of the three branches of power in June produced no results, given the poor policy management in law enforcement. To put it more precisely, the government protected the landlords by ignoring the supervision over law enforcement.
The ceiling on home loans has been steadily raised by governments in the past few decades. As a result, the loan has increased to a certain extent compared with housing prices. Unlike the above two issues, governments have been able to help the deprived in this regard. But if you take a closer look, you will realize that even this decision was in the interest of the rich more than the general public. The rise in loan ceiling has saved the real-estate market from recession and added to the value of their property.
Mehr Housing Project [the government-sponsored project to supply affordable housing to the middle class] did not help much to solve the housing problem; it even inflicted considerable losses on the economy. It began with the right premise, i.e., the share of land in the total cost of housing should be reduced. The success of such a plan could threaten the interests of the lords of the new era; their properties would lose their exclusive status after all. But the supporters of the privileged class did not seem to worry about the implementation of Mehr Housing Project, because even if this plan was successful, the favorable location and quality of their lands in the popular urban areas would be more attractive than the deprived areas on the outskirts of the city.
This list can go on and on. All the evidence shows that every decision and measure that threaten the interests of the owners of urban property get stuck in the administrative labyrinth and are then forgotten. On the contrary, all policies that protect their interests have a chance of coming into effect.
In Iran economy, one of the key reforms to bring the national economic train back to the development track is to overhaul the real-estate market and disrupt the modern lord-serf equation. However, these reforms don’t even have a chance to be proposed, as the privileged can exert a significant influence on the decision-making system.
Surprisingly, many of the policymakers do not cherish the privileged class and live like the common people. But it is an undeniable fact that the decision-making system in its entirety protects the interests of the privileged class and does not pay attention to the suffering of the common people and the crying need for reforms.
