New Housing Plan: More of the Same

EghtesadOnline: The government recently announced a plan to construct homes for the newlyweds and people with reasonable income or pensioners who do not own a home and cannot afford to buy one without state assistance.

News ID: ۷۴۹۰۳۶

25 November 2019

Known as the ‘National Housing Action’ plan, the initiative has been discussed in the media and among housing experts, with most expressing reservations about the success of this macro plan.

One key factor, informed observers and academia recall, is the deplorable experience of the ‘Mehr Housing Plan’ that was launched by the government of former president, Mahmoud Ahmadinejad, in the last two years of his two-term presidency that ended in 2013.

The multibillion dollar housing plan for the low-income strata did deliver housing to many deserving people, but it had more than its share of controversy. As if the multiple problems were not enough, a large number of people who made advance payments have still to receive the key to their homes almost 10 years after the scheme was launched with a lot of fanfare, according to Financial Tribune.

How many unresolved problems that hastily put together housing plan had and still has is not the subject of this write-up.

What seems strange is that the new housing plan of the Rouhani administration and its timing—barely two years before President Hassan Rouhani leaves office after his second and last term.

Mehdi Soltan Mohammadi, who is a lecturer in Tehran, told the Persian-language news website Fararu that he fails to understand why governments think up such huge and costly projects “so late into their term(s)”.

“If governments really wish to build homes for the people, they should start as soon as they take office” and not wait for the dying years when time is running out and few if any are willing to take responsibility and get the job done.

Struggling Still

Mohammadi is quick to recall the unending controversy over the Mehr Housing Plan and the problems it created for the incumbent government, with which it is still struggling and wants to wrap it up amid mounting losses and the wrath and grievances of those poor souls still waiting to take delivery of their apartments.

He adds that history has the “habit of repeating itself” and the national housing plan of this government will face the same fate, “as this too will be transferred to the next administration”.

Rouhani’s Minister of Roads and Urban Development Mohammad Eslami said earlier this month that the government has “allocated 300 trillion rials ($2.4 billion) for the new housing scheme that will create 130,000 jobs and lift industries related to and working for the once powerful construction sector”.

Not much is known about the latest plan of action. The minister has been quoted as saying that “land for the macro plan is being selected in cities and regions that have appropriate infrastructure, utilities and related services”. He said that demand for housing in selected areas should also be “compatible with the target groups”.

The university lecturer notes that the two points of utmost importance is “land and funding”. He stated that the government is “struggling with a deep budget deficit” that only gets bigger as time passes–partially a result of the hostile US economic sanctions and pressures after US President Donald Trump abandoned the landmark Iran nuclear agreement last year.

Access to Land

The new embargoes on oil export, banking and shipping have disrupted Iran’s oil exports to a large extent, as a result of which many development projects have been put on hold.

With regard to the availability of land, he said it is “scarce and costly in most cities” where the government would want to start construction”.

Social experts and academia are of the strong opinion that the new housing scheme must not be limited to selected groups as seems to be case and the “public at large should benefit”.

Another issue that has been discussed in recent days goes back to the unsuccessful experience of the Ahmadinejad days. As can been seen around most cities and major urban areas, the poor quality homes that were built under the Mehr scheme are far away and in places that have come to be known as satellite towns.

Few experts and market analysts believe that this time around it will different and the new housing complexes will not be similar to the “Mehr hostels”. It would be fair to conclude that this is something like more of the same!

In interviews and TV programs in the past, people who had bought the low-cost houses built by the former government complained that they “were living in hostels. We come and sleep in the nights only to get out early in the morning.”

Field trips to the areas where hundreds of buildings have been constructed by contractors working for the Mehr Housing Plan show that schools, public transportation, clinics, shopping centers, private language centers, law enforcement offices … are still not in place, though most homeowners have access to water, piped gas and electricity.

Beyond the Gov’t Domain

Seen from a realistic angle, in the best-case scenario, governments are not efficient in undertaking large-scale housing construction, or for the matter any other productive work that demands discipline, excellence, responsibility and accountability.

If the past is anything to go by, almost 95% of homes in Iran in the past 70-80 years were built by the people and private companies with zero government involvement.

On more occasions than one, academicians and experts in diverse economic, financial and social fields are on record as saying that the government should simply stay away from such ventures.

It should mind its own business and let others conduct theirs. What it can and must do is to create the infrastructure and suitable conditions for home construction and manufacturing as a whole.

The people themselves and construction firms apparently have the ability to do what is expected of them and do it in the best possible manner with the best raw materials, proper oversight and reasonable profit.