Domestic Economy

83% Progress in Mehr Housing Project

83% Progress in Mehr Housing Project83% Progress in Mehr Housing Project

The Mehr housing scheme is expected to be eventually completed by the end of next Iranian year, ending March 20, 2016, Mohsen Nariman, the deputy minister of roads and urban development, said in an interview with the national television on Saturday.

“The scheme has so far had 83 percent progress,” he said, noting that except for the nominal budget the government provided for the project through subsidy reforms, the rest has been taken care of by the buyers.

The scheme, initiated in 2007 by the former administration, was expected to provide two million low-income strata of the society with affordable housing units through free land and cheap credits, which were to be offered to contractors. But the national project slowed down later due to the lack of finance.

So far, there have been conflicting reports on the extent of the project’s progress.  On December 1, Mohammad Pejman, the managing director of the National Organization for Land and Housing, announced that the Mehr scheme has had 50-60 percent progress. It’s not clear now how the government could manage to make 23-33% progress in less than a month, while it took nearly seven years to reach 50% progress.  

“More than 40% of the total amount of 500,000 billion rials allocated to the project was spent by the previous government, and the current government has spent only 9% of the total budget on the project,” Nariman further underlined.

He said that the government is trying to minimize its role in the scheme, as it believes that the project “must be run by the private sector.”

Despite its opposition to the controversial scheme, the Rouhani administration announced last year that it would continue the construction of the unfinished parts of the project. However, it refused to implement new phases of the scheme.

Instead, in mid-September, Abbas Akhoundi, the minister of roads and urban development, announced a new project called the “Social” housing scheme, which is set to kick off at the end of the current Iranian year (ending March 20, 2015). The minister said the current deficiencies in the Mehr housing scheme have been corrected in the new project, promising that the Social scheme, unlike the Mehr project, will provide all infrastructural facilities the buyers may need.

Criticizing the previous administration’s handling of the Mehr project, the Rouhani administration as well some economists argue that with the  implementation of the project, the previous government injected large amounts of money into the market, causing inflation to skyrocket.