The Central Bank of Iran has finally agreed with the long-pending real estate leasing scheme which was proposed by the National Association of Leasing Companies. The scheme will be legally-binding when the Money and Credit Council - the top monetary policymaker approves it.
Making the announcement, the director of CBI’s Credit Department, Asghar Mirmohammad Sadeghi, said the decision will face further scrutiny by the MCC before it is implemented, Tasnim News Agency reported.
The leasing plan has long been on the agenda of Bank Maskan and the CBI. It is expected to meet a part of the demand in the sluggish property market acing a litany of hurdles, not to mention the declining purchasing power of most first-time homebuyers in the middle and low—income bracket.
The previous government banned the leasing companies on grounds that they had abused the key housing market for personal gain.
Outlining CBI strategy for pulling the housing market out of its current morass, Mirmohammad Sadeghi said the CBI’s program for boosting the property market has three main components: first, issuing up to 3 trillion rials ($98.9 million) mortgage bonds through the stock market as part of a trial scheme; second, extending the rights to sell housing bonds, which was previously exclusive to Bank Maskan, to all lenders. Lastly, lifting a ban on real estate leasing imposed by the CBI to breathe new into life to the sector ,” he added.
Analysis by independent observers, however, show that a major constraint in home leasing contracts is the prohibitive rates because the lessees are unable to pay the staggering interest hovering around 30% and above, according to people familiar with the matter.
Last month Hesam Oqbaei, head of the Tehran Association of Realtors, in an interview did not agree with the housing leasing scheme. He warned about the disruption that the visibly avaricious firms can, and will, cause in the property market.
