The approval of the outlines of a double-urgency bill called “controlling and streamlining the rent of residential units” in July 2022 with a slim majority of 50.9% indicates that officials, both in the government and the parliament, have finally realized the importance of housing and are trying to control the crisis.
Although the involvement of officials with the housing matter should be considered a step forward, the fundamental shortcomings and weaknesses of such initiatives cannot be ignored, Nasser Zakeri, an economist, prefaced an article for the Persian daily Shargh with this note. A translation of the text follows:
As its title suggests, the plan in question pursues the key goal of streamlining the housing market. The plan says owners of urban lands should be compelled to construct building on them and the owners of vacant residential units should be forced to offer these units for sale or rent.
The premise of the plan is that the rapid price increase in the housing market has put the screws on tenants and a large number of them can’t rent the home they need.
If housing supply were to increase, the rapid price growth will be contained. In addition, more effective supervision over the performance of real-estate agents will prevent them from raising prices and pressuring tenants.
Obligating banks to pay loans to tenants will eventually restore their financial position to rent a home. As such, this plan can be seen as a plan to “increase the ability to rent”.
Clearly, the shortcomings of the plan will be identified and resolved once experts probe into it. But the main fault in the plan lies in the perspective of the plan’s authors about national economy and citizens’ rights.
Article 31 of Iranian Constitution
Article 31 of the Iranian Constitution has recognized the inalienable right of all citizens to have access to housing that suits their needs; the law requires all government bodies to provide facilities for all needy citizens of the country.
In other words, the message of this progressive principle is to increase the citizens’ financial ability to buy and own a home. However, the authors of the plan seem to believe that in the current situation, it is not possible for all citizens to own residential units because the implementation of misguided economic policies in the past have divided today’s society into two groups: landlords and serfs.
Landlords have taken over urban real-estate and the serfs cannot become home owners. Therefore, conditions should be provided so that this group of people, who are deprived of the option of buying housing, won’t be deprived of the possibility to rent housing either.
This is the reason why we see that the plan has been prepared to “improve the ability to rent a home” rather than a plan to “improve the purchasing power of those in need of buying a home”.
Most Tenants Forced to Rent
The proponents of the plan will say all countries, including those with strong economies, have tenants. Therefore, this market should be streamlined and the problems of tenants should be solved. In response, we say that what makes our society different from those with strong economies is the share and intensity of the factor of financial incapability.
Most tenants in our society are forced to rent because of the lack of financial ability; only a small number of them do not intend to buy a home in view of their employment or educational conditions. While in developed countries, the second factor players a bigger role.
The interesting point is that apparently the plan’s defenders are not hopeful about the short-term effectiveness of the plan.
One of the members of the Majlis Development Commission said, “Hopefully, the increase in supply will stop the growth of rent-seekers in the next two or three years.” This means that until then, the precarious situation of tenants will continue.
The more interesting point is that this law won’t be enforced for nearly a year, as it has to go through many stages to reach the implementation stage. And it is not clear whether the bill will be passed by the parliament since it had the backing of a narrow majority last year.
