The Theatrics of State-Run Housing Projects

EghtesadOnline: State-run housing projects in Iran are usually theatrics staged by governments, despite millions of dollars of spending that usually lead to the squandering and misappropriation of public funds, Mohammad Reza Zohrehvandi, the chairman of Industries Commission of Tehran Chamber of Commerce, Industries, Mines and Agriculture, says.

News ID: ۷۵۰۰۴۸

16 May 2020

What follows is a translation of his write-up published on the chamber’s website:

Mass production of housing by governments has a long history in Iran; the so-called “National Housing Initiative” is not the first.

Mehr Housing Plan of the previous administration has by far been the most important of such projects over the past decade, the economic consequences of which need to be thoroughly evaluated for future reference.

It was clear from the outset that the Mehr Housing Plan was an ill-considered project conceived against the backdrop of copious revenues the country gained from the then-high oil prices. The implementation of the project was delegated to state-run and semi-governmental organizations, which were utterly bereft of expertise.

Those companies handed down the work to their subsidiaries and other companies and left them without adequate supervision.

The construction of homes was not put in safe hands, such that the one whose job was to install cabinets also assumed the responsibility of installing elevators without taking into consideration the needed standards, procedures to secure permits and assessment of the costs of the job. As a result, subpar imported elevators were installed in buildings.

State-run projects in our county are usually theatrics staged by governments; they carry heavy price tags and squander national revenues. The non-optimal locations where these homes were built are deemed too remote to live in. Residential units of the Mehr Housing Plan were constructed too hastily in areas that did not appeal to people because of their lack of infrastructural facilities and social amenities such as schools and greenery.

Now the government [of President Hassan Rouhani] talks of the National Housing Initiative, though its coffers are all but empty compared with the time Mehr Housing Plan was launched. The government might enter into barter deals with some organizations.

Semi-governmental organizations have a bigger chance of being selected by the government, thanks to their economically better conditions. One of the options for generating revenues is for the government to sell its properties; the government must have introduced this project to make income.

Several speculations are floating about the National Housing Initiative. I hope to see this project become a huge success but without a comprehensive plan, but I can’t be optimistic.

Mehr Project, National Initiative in Review

The so-called Mehr project is a large-scale construction program initiated in 2007 by the previous administration to provide 2.2 million low-income people with housing units through free land and cheap credits.

According to Ahmad Asghari Mehrabadi, deputy minister of roads and urban development, a total of 200,000 Mehr housing units have been delivered and 125,000 are ready to be delivered to their owners throughout the tenure of Roads and Urban Development Minister Mohammad Eslami.

“Tehran Province accounts for the highest number of Mehr housing units with 335,000, of which 301,000 have been completed and 33,000 remain unfinished,” Mehrabadi said.

Parand New Town in Robat Karim County hosts the lion’s share of Tehran’s Mehr housing units with 96,000, of which 82,000 are completed and 13,600 are planned to be finished by Sept. 21, he was quoted as saying by Hibna.

Meanwhile, registration for the National Housing Initiative, aimed at supplying a total of 400,000 affordable homes to people, started in November.

“However, out of 29,000 people who registered for the government-sponsored plan to be partly implemented by the Islamic Revolution Housing Foundation, only 12,000 have completed their registrations,” Abazar Jaberi, an official with the foundation, said last month.

Despite notifications sent by the Housing Foundation to people the month before, only 44% of those who initially registered for the initiative uploaded their documents on the website, he added.

“The foundation’s share of the registrations was 65,680 applications, that of Road and Urban Development Ministry’s general offices 73,200 and the share of New Towns Development Company was 95,370 applicants, indicating that applications for homes in new towns were by far higher than others, thanks to their proximity to big cities.”

Nearly 20,000 of 400,000 homes will be constructed in new towns, 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 Tehran’s Pardis.

Jaberi noted that under the National Housing Initiative, the foundation is the designated body in charge of carrying out the project in cities with a population of under 100,000 with the exception of some cities like Qom.

“Increasing the capacity of registrations is conditioned on government providing the land. Thus far, land needed for the construction of 36,000 homes has been provided,” he said.

“Out of 65,680 applicants of homes to be constructed by the foundation in the first round, the qualification of 33,000 were approved; about 4,000 of these people will only receive the loans since they will provide the land themselves.”

Jaberi told the Persian-language daily Iran that in the second round of registration, started in February, a total of 1,362,000 have registered, whose qualifications need to be assessed.

“Of the total 234,250 who have applied for National Housing Initiative, the eligibility of 119,000 has been approved,” he said.

Being married, having no record of using governmental financial facilities for purchasing a house and having lived in the city where applications for the affordable housing program are being submitted are three eligibility requirements for the National Housing Initiative.