Economy, Business And Markets

Co-Ops Revive Hope for Homeownership

Co-Ops Revive Hope for Homeownership Co-Ops Revive Hope for Homeownership

Ministry of Cooperatives, Labor and Social Welfare has made changes to regulations for housing cooperatives, reducing their license validity to five years and cutting the maximum number of members to 200 in an attempt to improve their performance, the ministry’s deputy for cooperatives affairs said Monday.

“We carried out a study on the performance of housing cooperatives across the country. Results indicate that issuing permanent licenses and allowing cooperatives to take unlimited number of members have indeed severely harmed their performance,” Hamid Kalantari was quoted as saying by the website of the Ministry of Roads and Urban Development.

Housing cooperatives are usually formed by employees of organizations, companies and ministries to provide their members with low-cost homes. The cooperatives buy land from the government and construct apartments for their members. Iran’s first housing cooperative was founded in 1952 by the personnel of the National Iranian Oil Company. According to available data, an estimated 12,000 housing cooperatives are active in the country and have built and delivered 2.6 million housing units to their members.

Kalantari acknowledged that some cooperatives have had a poor record. Pointing to 950,000 houses built by the cooperatives as part of the Mehr Housing Scheme, he said houses built by the cooperatives are of better quality compared to those built by private builders. “This is due to the fact that members of cooperatives also live in those homes’’ and direct beneficiaries of the projects they undertake.

The former president Mahmoud Ahmadinejad launched the controversial Mehr housing project in 2007, with the aim of providing thousands of housing units to low-income families. The scheme, which called for the construction of two million units over a five-year period, contributed generously to galloping inflation and huge amount of liquidity that later almost crippled the next government that took office in mid-2013.


The backlog of unfinished projects of the cooperatives also seems to be the result of mismanagement. Procrastination in the construction process and enrolling new members to compensate for budget shortfalls -- caused by inflation and rising prices of raw materials -- are the main reasons of their dysfunction.  

Hamed Mazaherian, deputy minister of roads and urban development, said that the managers of cooperatives lack knowledge and experience related to their work. They also are unaware of the mechanisms of the housing market and financing methods – two major challenges facing cooperatives.  

“The Ministry of Roads and Urban Development is planning to offer consultation services to housing cooperative to improve their performance,” he said in an interview with IRNA.

 “During the previous government, cooperative had too many members who normally did not even know each other,” he said. “These issues led to an increase in unacceptable and dodgy operations by the cooperatives.”

Caption: Housing cooperatives are usually formed by employees of organizations, companies and ministries