Ministry Rolls Out Plan to Streamline Tenancy Market in Iran

EghtesadOnline: The Ministry of Roads and Urban Development has come up with a roadmap to streamline the country’s tenancy market.

News ID: ۷۴۹۱۶۵

11 December 2019

Taxing vacant homes, finishing homes authorized for construction under the Mehr Housing Plan, pressing ahead with the National Housing Initiative and introducing a professional home leasing system by creating property rental companies are short- and long-term plans pursued by the ministry, IRIB News reported.

According to the Central Bank of Iran, the price of rented residential units in Tehran and across Iran’s urban areas increased by 31.4% and 31.7% respectively during the eighth month of the current Iranian year (March 21-Nov. 21) month-on-month, Financial Tribune reported.

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) and put at the disposal of Iranian National Tax Administration to tax owners of empty homes, News.mrud.ir reported.

Iran currently has more than 2.6 million empty homes, 500,000 of which are in the capital city Tehran.

"The number of empty homes in Iran is three times the global average. Bringing 40% of empty homes into the tenancy market would help meet the housing needs of Tehran’s residents," he said.

“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.”

Due to inflated 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 previous administration and delivering them to owners by the yearend, today’s renters will be able to move to their own homes.

This is while, according to housing experts, 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 to provide two million low-income Iranians with housing units, but the national project slowed down due to lack of fund.

Meanwhile, registration for the new government-sponsored affordable housing project called "National Housing Initiative" started last month.

The initiative is aimed at supplying 400,000 affordable homes to the market, the construction of 180,000 of which has already begun.

The total number of homes is planned to be constructed as per the National Housing Project over two years (March 2019-21). New Towns Development Company will build 200,000, the Urban Development and Renovation Company 100,000 and the Housing Foundation of the Islamic Republic of Iran will construct the remaining 100,000 residential units.

Nearly 20,000 of these residential units will be constructed in new satellite cities, including 7,134 in Fooladshahr in Isfahan Province, 4,448 in Parand in Tehran Province, 2,762 in Golbahar in Khorasan Razavi, 1,547 in Sahand in East Azarbaijan Province, 1,497 in Sadra in Fars Province, 800 in Amirkabir in Markazi Province, 520 in Hashtgerd in Alborz Province and 150 in Pardis in Tehran.

The residential units' rent index for Iran's urban areas (using the Iranian year to March 2017 as the base year) stood at 151.9 in summer, the second quarter of the current Iranian year (June 22-Sept.22), indicating a 23.1% rise compared with the same quarter of last year.

23% YOY Rise in Q2 Residential Rent Levels

According to the Statistical Center of Iran, the year-on-year inflation rate for the preceding quarter, which ended on June 21 was at 25.6%.

The highest and lowest inflation rates, on a year-on-year basis in the second quarter of the current year, were registered for Lorestan with 37.2% and West Azarbaijan with 11%.

The index saw a 6.9% increase compared with the quarter before.

Lorestan and East Azarbaijan provinces registered the highest and lowest quarter-on-quarter inflation rates for tenants in urban areas with 23.6% and 2.7% respectively.

The average index in the year ending Sept. 22 increased by 24% compared with last year’s corresponding period.

SCI had put the average annual inflation rate for the preceding quarter, which ended on June 21 at 22.6%.

The highest and lowest average annual inflation rates were registered for Tehran and West Azarbaijan with 33.7% and 9.4% respectively.

The general housing index in urban areas was put at 152 in summer, indicating a 6.9% rise compared with the previous quarter and 23.2% growth over the same quarter of last year. The average annual index increased by 24.1% in Q2 compared with the similar quarter of last year.

The index for maintenance and repair services of residential units, including plumbing, plastering, home electrification and insulation services, in urban areas stood at 163.2 in the same quarter, indicating a 6.2% rise compared with the previous quarter and a 33.1% growth over the same quarter of last year.

The average annual index for maintenance and repair services increased by 32.6% in Q2 compared with the similar quarter of last year.