Gov’t, TM to Build 55,000 Houses in Old Districts

EghtesadOnline: The Iranian government and Tehran Municipality are assessing regulations of their joint project to build 55,000 residential units in Tehran’s distressed areas under the moniker “Pishgam Housing Plan”.

News ID: ۷۴۴۳۸۲

12 November 2017

During a coordination meeting between the officials of Urban Development and Revitalization Company of Iran as the government representative and Urban Renewal Organization of Tehran as the city’s urban management agency, they discussed different aspects of the project such as its legal process in the Cabinet and Money and Credit Council, Tehran Municipality’s official website reported.

According to Tehran Municipality’s report, this organization will utilize its full potential to implement the Pishgam Housing Plan that will first focus on Tehran’s old neighborhoods and then expand in other cities.

It was determined that the next meeting will be held on UDRC’s premises, in which the officials will undertake the final assessment of the project’s draft to be presented to the Cabinet for approval, according to Financial Tribune.

However, this is not the first time the government has made a pitch in the country’s housing sector.

Back in 2007, the administration of former president, Mahmoud Ahmadinejad, initiated a large-scale construction project named Mehr Housing Project to provide two million low-income people with housing units through free land and cheap credits, but it was not completed by the end of his term in office.

The project dragged on during the first tenure of President Hassan Rouhani and caused many headaches for the government that has been continuously pressured to finally see it through the finish line.

This was followed by the “Social Housing Plan” that refers to a government scheme to provide homes to low-income families by building thousands of residential units each year. The scheme is to replace Mehr Housing Project as the signature housing policy of the incumbent administration.

Loans for Major Builders

As per the government’s policy to shift the focus of major builders to distressed urban areas and informal settlements and offer them special incentives to move their activities to those parts of the city, Roads and Urban Development Minister Abbas Akhoundi has offered new options for major builders’ activities.

During a meeting with well-known builders and construction companies, the minister assessed the issues of residential units’ pre-sale while he clarified how to start activities in distressed urban areas and informal settlements.

Akhoundi referred to the mass builders’ problem of acquiring loans from banks and pre-selling their apartments, as he emphasized the necessity of having clear regulations in this regard.

“If a builder intends to pre-sell its building and still get a loan from Bank Maskan, the bank needs to be notified at the start of the contract and the builder also needs to open an account in the bank and deposit all earnings in that account so the bank can be sure that the resources are being used in the project,” he said.

The minister believes that this will resolve many issues for banks and builders, as it creates a good and safe system for residential units’ pre-sale.

“Pre-selling an apartment is a very transparent process all over the world but it also contains a level of risk for both sides,” he said, stressing that different organizations such as guarantee funds are active in this field in other countries.

Akhoundi added that pre-selling an apartment will definitely need some kind of guarantee both for customer and the owner, as it makes their deal credible and favors both sides.

The minister noted that the problem in distressed urban areas and informal settlements is not the volume of residential units but their quality.

“For instance, we have three million residential units in an informal settlement, which can be considered only as a roof over the head but in terms of quality, they cannot really be considered a residential unit,” he said.

Akhoundi presented models whereby the government helps builders to become active in old neighborhoods by offering them land to start their project or by providing them enough resources to buy a piece of land in distressed urban areas.