Today, all governments in the world list the reduction of poverty and the population below the poverty line as their main priorities and policies. The necessity of safeguarding human dignity has been envisioned in the Iranian Constitution and therefore, this government responsibility gains more importance. In other words, if the elimination of poverty is one of the priorities of other countries, it should be considered the top priority of Iranian governments. The special state of housing ownership in Iran has been the focus of experts for years, as they have understood that the metaphorical storm of poverty finds its way into people’s lives through the broken window of housing.
These were stated by Nasser Zakeri, an economist, in an article for the Persian daily Shargh. A translation of the text follows:
Rising Poverty
The number of tenants in Iran has been on the rise over the past few decades.
According to the National Population and Housing Census of the fiscal 2016-17, tenants account for 30.7% of the Iranian population; unofficial estimates put the share at 40%.
Note that the percentage of tenant population is higher than this figure in some developed countries, but that’s not necessarily because of their poverty.
In Iran though, a large number of citizens cannot afford to buy housing and have resorted to living in rented dwellings out of necessity. The rise in the number of renters shows that poverty is increasing. When the low-income members of the society have to spend most of their income on paying rents, their livelihoods become more vulnerable by the day; they lose the ability to save money to buy a house and even to provide security deposit on their rented homes in the coming years. Under the circumstances, the government should not be indifferent to the developments of the rental housing market and leave the tenants in the cold.
If the government is sincere about fighting poverty, it needs to support tenants. In the past, governments introduced measures to help people buy homes. However, the increase in home loan ceiling, Mehr Housing Project and the likes failed to have a meaningful effect on this situation.
Under the circumstances, the government has tried to intervene in the rental housing market since 2019-20 to at least improve the situation of tenants. The heads of the three branches of power [executive, judiciary and legislative] approved legislation that placed a cap on rent hikes, aiming to stem the excessive growth of rents. They have annually extended the legislation, but the rental housing market does not comply with this toothless law.
It’s as if senior officials believe their duty is to simply issue an order and express their sympathy with tenants; they don’t care about how tenants will cope with the rising rents.
Undoubtedly, controlling the flow of rising prices and maintaining the purchasing power of low-income deciles are necessary to prevent the spread of poverty.
As housing costs account for the lion’s share of household budgets, restraining the increase in rents is an important element of plans to fight poverty. However, the past four years has clearly shown that the mere issuance of a statement without a guarantee of implementation and abandoning the supervisory role have not helped solve the problem and only deepened the despair of low-income groups. They feel that their problem is not the government’s concern and that they have to single-handedly pull themselves out of poverty and misery.
Advisory Notes
A quick solution for the housing problem and the provision of decent housing for those who don’t own a place are an undeniable necessity that requires a comprehensive plan; the government should take serious steps before it is too late. Putting the rental housing market in order in the short term can alleviate the pains of low-income groups to some extent. As a result, the government is advised to take the following two measures:
The decrease in interest on bank deposits in recent years has prompted landlords to set a lower conversion rate for the deposit paid by tenants. Therefore, this monetary policy has hurt tenants. There are also staunch opponents to the increase in bank interest rate. The government can change the deposit conversion rate in favor of tenants by separating the small and large deposit segments, and applying a higher interest rate on small deposits.
Over the past three years, the lack of a strong guarantee for the implementation and supervision of the legislation passed by the heads of the three branches of power has made the rent ceiling ineffective. The government should provide the legal mechanism so that future legislations do not suffer the same fate. A revision of tax policies can also help prevent landlords from increasing rents.
By strengthening its regulatory system, the Ministry of Roads and Urban Development should warn landlords and real-estate agencies that, unlike previous years, tenants are not “alone” this year.
I recommend that all officials, including government executives, senior decision-makers and members of parliament, declare their properties to promote transparency. The move will help people know that government officials’ indifference regarding housing crisis is not because of a conflict of interest.
