Economy, Domestic Economy

Cooperatives in Housing Projects

Cooperatives in Housing ProjectsCooperatives in Housing Projects

Officials are drawing up a successor to the seven-year-old Mehr social housing project, which has been blamed for everything from corruption and extended construction delays to its role in fuelling inflation.

However, new plans have come under fire as cooperatives, accused of being the main culprits in Mehr project’s many ills, will once again be invited to contribute to new social housing programs.

The Mehr Hosing Project, initiated in 2007 by the former administration, was expected to provide two million low-income strata of the society with housing units through free land and cheap credits. But the nationwide scheme slowed down later due to lack of funding.

“Regarding [the construction of] social housing, we will allocate a part to cooperatives and we will certainly exploit their capabilities,” Mehr news agency quoted Minister of Cooperatives, Labor and Social Affairs, Ali Rabei as saying on Friday.  

The labor ministry will work together with the ministry of roads and urban development on the new social housing project.

Out of the 2.8% GDP growth reported by the Central Bank of Iran in the 3rd quarter of the past Iranian calendar year (ended March 20), 0.8% belonged to the construction sector. However, private sector construction shrank by as much as 5.5% over the period.

Meanwhile, there is a growing need to expand social housing amid rising housing prices as well as the increasing number of young families looking for a house. This is particularly the case in Tehran, where average house prices run over and above normal life-time savings.

From this perspective, the government’s reliance on cooperatives seems logical and almost inevitable.

Still, the government should expand and improve supervision of cooperatives and ensure that previous failings are not repeated.

With regards to the Mehr project, cooperatives were blamed for lacking accountability. Buyers have often walked into a closed door when they wanted to complain to the cooperatives’ boards of directors about delays in construction and the poor quality of the housing units.

On top of that, cooperatives have sometimes employed private contractors to save on costs. However, when payment disputes between the two arose, it was the buyers who suffered the consequences for being incapable of claiming their house.

Critics believe the government should take a more active and transparent stance towards cooperatives, the performance of which is not necessarily as bad as it is accused of. Amid private sector disinterest, cooperatives, with clear and direct government supervision, could play a dynamic role in expanding much-needed social housing.