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The administration has tried to boost middle-income households by developing the market for home presales.
The administration has tried to boost middle-income households by developing the market for home presales.

Ministry to Support Middle-Income Housing

The government had undertaken four measures to support middle-income housing throughout the country
The Ministry of Roads developed the mortgage market and issued MBS which boosted the capability of lenders in providing people with long-term loans in the housing sector

Ministry to Support Middle-Income Housing

In line with President Hassan Rouhani's housing policies, the Ministry of Roads and Urban Development has devised four general policies to promote home ownership for the middle-income group.  
These policies include developing the mortgage market, issuing mortgage-backed securities, authorizing rent-to-own homes, establishing the Housing Savings Account to promote the culture of saving to purchase homes and expanding the market for home presales.
The continuity of these four executive plans in the next administration, which is set to begin in early August, and reforming a number of them will address the housing needs of middle-income households, Tasnim News Agency cited the Roads Ministry as saying.
In supporting middle-income households, the ministry's first measure was to develop the mortgage market and issue MBS, which boosted the capability of lenders in providing people with long-term loans in the housing sector.
In the first round, a total of 300 billion rials ($8 million) worth of MBS were issued during the previous fiscal year that ended in March, with another 7 trillion rials ($186.6 million) in the works.
Using the capacities of the private sector by way of adding the services of rent-to-own companies in the housing sector was the second measure.
In February, the chairman of Iranian National Leasing Association announced that rent-to-own companies have been allowed to operate in the housing market, stating that by following up the issue and convincing the Roads Ministry, real-estate leasing through non-bank rent-to-own companies acquired a license of operation.
The former administration had banned private leasing companies from entering the housing market, but the CBI allowed the private sector to finance up to 70% of the value of a home through the lease option with an interest rate of 21%, approximately 3% higher than those of 18% offered by the banking sector.
However, as a number of officials and pundits have pointed out, high interest rates and MBS issuance have prevented the leasing companies from becoming noteworthy players in the housing sector.
The Roads Ministry and the administration also tried to promote the culture of buying homes based on saving and introduced the Housing Savings Account two years ago, which scheme has been devised to promote home ownership for first-time buyers and requires applicants to make an initial deposit and wait for a year to become eligible for the loan.
In Tehran and other big and small cities, the amount of loan has been set at 800, 600 and 400 million rials respectively ($25,600, $19,200 and $12,800).
According to Bank Maskan, the agent bank of the housing sector, more than 160,000 such accounts have been opened with the lender so far.
In early May, a board member of the bank announced that total deposits under the scheme amount to 36 trillion rials ($960 million).
The fourth strategy of the ministry to boost middle-income households is to develop the market for home presales.
The executive bylaw for the Housing Presale Law was communicated in 2014 and to help implement the law, the directive for using escrow accounts was devised last year.
However, as a result of difficulties with the law, the presale market has yet to take off in earnest, with reforms in the offing.  
Hamed Mazaherian, the deputy for housing and buildings with the ministry, has commented on the state of rents in the housing market.
"It is our prediction that during the current fiscal year, we will have an approximately 10-12% rise in rents and anything higher than that will be due to the unreasonable requests of landlords," he was quoted as saying by the official website of the ministry.
Noting that this rise will be in line with the inflation rate that has just gone back to double digits, Mazaherian noted that according to latest statistics, "tenancy in urban areas has increased to 36.8%".

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