The Ministry of Roads and Urban Development is planning to assist renters by arranging a bartering platform where new and semi-finished homes are exchanged for government-owned lands.
“The private sector's mass builders and real estate developers will be granted incentives to use government-owned land to build new residential units. New homes will be offered on the tenancy market at affordable rates, on par with renters' income. This medium-term project would help both renters and real-estate developers and give way to a professional home leasing system,” Parvaneh Aslani, director of the ministry’s Housing Economy Department, said.
Housing experts believe that the supply and demand imbalance of the housing market is to blame for faster growth in rent rates compared with home prices.
The ministry’s initiative would pull the housing sector out of its current recession by triggering construction, provided that the government’s intervention does not cause deviation in home prices and prolonged holdups, the Persian-language daily Iran reported.
Average Rent Inflation at 23.5% in Q3
The average Consumer Price Index for rent levels in urban areas in the four-quarter period ending Dec. 21 increased by 23.5% compared with last year’s corresponding period.
The Statistical Center of Iran had put the annual inflation rate for the preceding quarter, which ended on Sept. 22, at 24%.
The highest and lowest average annual inflation rates were registered for Lorestan and West Azarbaijan with 32.5% and 9.9%, respectively.
According to the SCI report, CPI for rent levels in urban areas (using the Iranian year to March 2017 as the base year) reached 162.8 in fall, the third quarter of the current Iranian year (Sept.23-Dec. 21, 2019), indicating a 7.2% increase compared with the quarter before.
Hamedan and West Azarbaijan provinces registered the highest and lowest quarter-on-quarter inflation rates for tenants in urban areas with 13.7% and 1.7%, respectively.
The consumer rent price index in urban areas increased 21.6% in Q3 over the same quarter of last year.
SCI had put the year-on-year inflation rate for the preceding quarter, which ended on Sept. 22 at 23.1%.
The highest and lowest inflation rates on a YOY basis in the third quarter of the current year were posted by Lorestan with 34.8% and West Azarbaijan with 10%.
CPI measured for housing in urban areas was 162.9 in Q3, indicating a 7.2% rise compared with the previous quarter and a 21.6% growth over the same quarter of last year.
The annual housing CPI increased by 23.6% in Q3 compared with the similar quarter of last year.
CPI calculated for maintenance and repair services of residential units, including plumbing, plastering, home electrification and insulation services in urban areas, stood at 171.7 in the same quarter, indicating a 5.2% rise compared with the previous quarter and a 26.1% growth over the same quarter of last year.
The annual CPI for maintenance and repair services increased by 32% in Q3 compared with the same quarter of last year.
According to the Central Bank of Iran's latest housing market report, the price of rented residential units in Tehran and across all urban areas in Iran increased by 28.2% and 30.1% respectively during the ninth month of the current Iranian year (Nov. 22-Dec. 22) compared with the similar month of last year.
Ministry Plans to Streamline Tenancy Market
The Ministry of Roads and Urban Development has devised a roadmap to streamline the country’s tenancy market.
Taxing vacant homes, finishing homes authorized to be constructed under the Mehr Housing Plan, pressing ahead with the National Housing Initiative and introducing a professional home leasing system by establishing property rental companies are short- and long-term plans the ministry has in mind, IRIB News reported last month.
According to Mahmoud Mahmoudzadeh, the head of the ministry’s housing division, a database will be launched by March 19, 2020 (the end of the current Iranian year) to tax owners of empty homes and put at the Iranian National Tax Administration’s disposal.
There are currently more than 2.6 million empty homes in Iran, 500,000 of which are in the capital city Tehran.
"The number of empty homes in Iran is three times the global average," he said, adding that directing 40% of empty homes into the tenancy market would help meet the housing needs of Theran’s residents.
“Like all other countries, a house must be considered a durable consumer good instead of a capital good. More than 75-80% of vacant homes across the country have been tracked,” he was quoted as saying by News.mrud.ir.
Due to inflating home and rental prices, many investors in Iran have put their money into the real-estate market.
Mahmoudzadeh noted that by speeding up the construction of a significant number of homes of Mehr Housing Plan initiated by the previous administration and delivering them to their owners by the current fiscal yearend (March 19), renters will be able to move into their own homes.
This comes, according to housing experts, as homes belonging to Mehr Housing Plan with no occupants account for a big share of vacant homes in Tehran Province.
In 2007, former president, Mahmoud Ahmadinejad, offered free land and cheap credit to contractors for providing two million low-income Iranians with housing units, but the national project slowed down due to lack of finances.
