Tehran Housing Inflation at 46.4%

EghtesadOnline: Tehran’s housing Consumer Price Index in the 12-month period ending July 21, which marks the end of the fourth Iranian month, increased by 46.4% compared with the corresponding period of last year, latest data released by the Statistical Center of Iran show.

News ID: ۷۵۰۶۸۷

13 August 2020

SCI had put the average annual inflation rate for the preceding Iranian month, which ended on June 20, at 47.8%.

The housing inflation for the month under review (June 21-July 21) registered a year-on-year increase of 58.9% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month ending June 20 was at 44.6%.

The housing CPI (using the Iranian month to April 19, 2016, as the base) stood at 507 last month, indicating a 10% rise compared with the month before.

During the month ending June 20, the housing CPI stood at 460.9, registering an 11.3% rise compared with the previous month.

According to the Planning and Housing Economy Office of the Ministry of Roads and Urban Development, a total of 14,330 homes were sold in the capital city during the month under review to register a year-on-year increase of 192.6% compared with the same month of last year and a rise of 29.7% compared with the preceding month.

The average price of each square meter of a residential unit in the capital city stood at 209.86 million rials ($939).

Performance of Tehran’s Districts

Among Tehran’s 22 districts, District 1 registered the highest average home prices with 453.175 million rials ($2,027) per square meter, followed by District 3 with 384.24 million rials ($1,719) per square meter and District 2 with 324.94 million rials ($1,453) per square meter.

District 18 offered the capital city’s cheapest homes with average per-square meter prices standing at 96.25 million rials ($430), followed by District 20 with 97.98 million rials ($438) per square meter and District 17 with 105.73 million rials ($473) per square meter.

The distribution of dealt properties shows that among Tehran’s 22 districts, District 5 grabbed the highest number of home sales (1,938) with the average price of 261.7 million rials ($1,170) per square meter. It was followed by District 4 with a total of 1,119 home deals with an average price of 206.32 million rials ($923) per square meter.

Districts 19, 9 and 16 registered the lowest number of deals during the month under review with 73, 140 and 150, respectively.

Over four months to July 21, a total of 38,245 home sales were registered in the capital city, indicating a 42.5% growth compared with the similar period of last year.

The average price of a square meter of residential property stood at 181.52 million rials ($812), which shows an increase of 41.9% over the corresponding period of last year, the ministry report showed.

Vacancy Tax

Members of Iranian Parliament approved revisions to Article 54 of Direct Tax Code last week. The legislation would make several changes to vacancy tax with the aim of returning empty properties to use as rental homes for people.

Under the new decision, homes in cities with a population of over 100,000 that are deemed empty will be taxed for each month they remain empty for more than four months based on their assessed rental income tax.

The owners of these properties will have to pay six times more than the rental income tax in the first year, 12 times more than the rental income tax in the second year and 18 times more than the rental income tax in the third year and the following years.

New homes will be subject to vacancy tax 12 months after the end of the construction project (as per the date printed in their construction permit). The proposal also pushes the deadline for vacancy tax of new homes that are built as part of mass construction projects; they will be taxed after 18 months after the end of their construction project, IRNA reported.

The parliament required the Iranian National Taxation Administration to notify property owners of empty homes one month ahead of the deadline, in cooperation with the Ministry of Information and Communications Technologies of Iran.

Householders are required to register the principal residence of the family in the nationwide online database of all residential properties across the country, the so-called National Property and Housing Database, within two months of the publication of guidelines of this legislation. Unregistered homes, owners of which have failed to log on their postal code and ID number at the database, will be accounted as empty homes.

Clause II of the new proposal says each household is allowed to name one more property as the second home, provided it is located in a city other than their primary residence. Second homes will enjoy exemption from vacancy tax.

University students studying in cities other than their own hometowns are allowed to register another property, besides their principal residence and second homes, and enjoy exemption from vacancy tax.

Residential properties used lawfully by businesses, institutes and companies would be exempt from vacancy tax, provided they are registered in the National Property and Housing Database.

All persons subject to the code are required to update their information in the database within one month of any change in place of residence such as the sale of their homes.

Executive bodies are only required to provide services, including opening of bank accounts, benefiting from welfare programs, selling electricity, water, landline and natural gas subscriptions and making school registration to residents based on their postal code and address uploaded on the National Property and Housing Database.

According to Mehdi Toghyani, the spokesperson of Majlis Economic Commission, the government and parliament are of the same opinion regarding the taxation of empty homes and that the new reforms to the legislation have been sent to the Guardians Council—the body in charge of ascertaining the constitutional and Islamic eligibility of all laws—for final approval.

A motion to consider the adoption of a vacancy tax was originally passed in the Iranian year ending March 2016. It stipulated that if a home remained vacant for more than a year, it would have been subject to Vacancy Tax.

Homes with a floor area of 150-odd square meters would have been subject to tax at the rate of 20% of the property’s rent value.

The Ministry of Roads and Urban Development was then tasked with designing, in cooperation with a number of other affiliated organizations and entities inside and outside of the administration, a database containing information on all residential units and homeowners across the country and handed it to the tax administration.

Three months ago, Minister of Roads and Urban Development Mohammad Eslami said the nationwide online database of all residential properties across the country had finally been submitted to the Iranian National Tax Administration that would issue tax statements as of the beginning of summer. Summer began on June 21, 2020.