The Central Bank of Iran has announced higher ceilings for security deposit loans to help the low-income strata rent a home.
As per a press release seen on the CBI website, banks and credit institutions are required to provide eligible applicants loans for renting a home up to 1 billion rials in Tehran City, up to 700 million rials in other big cities and up to 400 million rials in other urban areas across the country.
Banks must check the applicant’s and the spouse's financial condition with the CBI to ensure that they have not taken out previous housing and construction loans from the banking system.
Security deposit loans were unveiled by the government in 2020, as a coronavirus aid package for the large numbers unable to lease a housing unit due to the unprecedented increase in rents and home prices.
In 2020 the interest-only security deposit loans were 500 million rials in Tehran, 300 million rials in large cities with a population of over one million, namely Mashhad, Isfahan, Karaj, Shiraz, Tabriz, Qom, Ahvaz and Kermanshah, and 150 million rials in other cities for tenants.
The ceiling on security deposit loans has been raised for the second time this month.
last month it was announced that the loans would increase to 600 million rials in Tehran, 450 million rials in provincial capital cities and 350 million rials in other urban areas.
More than 450,000 households took out loans to rent a home in fiscal 2020-21 and 2021-22, the semi-official Mehr News Agency reported, citing the Ministry of Roads and Urban Development.
An official contract with the so-called ‘tracking code’ between the landlord and renter must be shown to the bank to begin the lending process. The landlord is required to repay the principal (the original loan) to the bank after the end of the lease agreement while renters pay its installments (only the interest).
The repayment period of security deposit loans is five years.
The average Consumer Price Index for rents in urban areas during the four quarters to March 20 jumped 26.9% on the corresponding period last year, the Statistical Center of Iran reported.
SCI put the annualized inflation rate for the preceding quarter ending Dec. 21 at 27%.
