Economy, Business And Markets

New Schemes to Help Resurrect Housing Market

New Schemes to Help Resurrect Housing MarketNew Schemes to Help Resurrect Housing Market

The Money and Credit Council, the highest policymaker in financial markets, has allowed Bank Maskan to offer regional housing loans in a bid to boost the long-stagnating housing market. MCC has also okayed the establishment of “savings and loan associations,” to promote financing for the property market.

Central Bank of Iran Governor Valiollah Seif made the announcement saying the MMC in the past year had floated several schemes to revive and reawaken the stubborn housing industry.

 “New measures are in place to promote the construction sector across the provinces,” IBENA quoted him as saying on Saturday.

“The MCC in its meeting last week, approved the establishment of regional institutions specializing in financing the housing sector,” he said, adding that 18 tasks have been designated for such institutions.

The CBI seeks to strengthen both demand and supply side of the market by attracting small savings which, according to Seif, is the hallmark of the plan. “The amount of regional mortgages will be determined in proportion to the volume of savings in each area.”

The CBI chief explained that the main goal of the scheme is to finance the construction and purchase of inexpensive residential units, which will be tailored to the special needs of different areas of the country. The new plan, long pursued by Bank Maskan (the main housing lender), is different from previous housing schemes that were one-size-fit-all solutions decreed for the whole country from Tehran bureaucrats sitting in their ivory towers.

Another novel feature of the new scheme that differentiates it from its predecessors is that lenders are not obliged to stick to a loan ceiling or a repayment period.

Real estate investors will be shareholders of the newly established S&Ls.

The same method had been used four decades ago to launch the huge housing complexes like Ekbatan and Apadana in west Tehran.  

With the aim of funding the housing sector by attracting small savings and allocating housing loans, and according to the Act 2 of Article 7 of the law to revive, improve and renovate distressed urban areas ratified by the government, the MCC last week gave a thumbs-up to setting up savings and loans associations.

Based on the scheme, the minimum capital requirement for launching regional S&Ls is 500 billion rials ($16 million) for Tehran, 350 billion rials ($11.2 million) for other major cities, 250 billion rials for provincial capitals and 100 billion rials ($3.1 million) for small towns.