Rent Increases Over 25% Banned in Tehran

EghtesadOnline: Tenancy agreements signed as of June 29 may not increase rents by more than 25% in Tehran and 20% rise in other large cities, President Hassan Rouhani said on Sunday.

News ID: ۷۸۵۵۴۹

29 June 2020

“As per the decision made by the National Taskforce to Fight Coronavirus, rent increases in other Iranian cities must not exceed 15% compared with that of last year,” he was quoted as saying by Hibna.

In early May, the taskforce also approved a self-executing two-month extension of rental agreements with the termination date falling between February 20 and May 20 to control the spread of coronavirus and help tenants battling job and income losses during the pandemic.

Courts were also required to not enforce penalty or evictions amid the outbreak while landlords and tenants were advised to be flexible in extending the lease contracts and scrap relocations to slow the spread of the virus.

Latest data published by the Central Bank of Iran on its website show that during the third month of the current fiscal year (May 21-June 20), the price of rented residential properties in Tehran and across urban areas increased by 27.6% and 30.7% respectively compared with the similar month of last year.

Significant Share of Households Live Off Rental Income

The head of Statistical Center of Iran says rental income accounted for 37.5% of the category entitled “miscellaneous sources of income” in the last fiscal year (March 2019-20).

Javad Hosseinzadeh added that sources of income for urban households in the last Iranian year were “paid-employment jobs” (32.5%), “self-employment jobs in farming or nonfarm payroll employment” (16.1%) and “miscellaneous sources of income” (51.4%).

The "miscellaneous sources of income" itself comprised of "rental income" (37.5%), "retirement income" (31.6%), "subsidies" (5.8%) and "other sources" (25.1%).

For rural households, sources of generating income were "paid-employment jobs" (30.7%), "self-employment jobs in farming or nonfarm payroll employment" (33.5%) and "miscellaneous sources of income" (35.8%).

The "miscellaneous sources of income" for households residing in rural areas comprised of "rental income" (27.3%), "retirement income" (20.1%), "subsidies" (17.7%) and "other sources" (34.8%), he was quoted as saying by the news portal of SCI.

More in CBI Report

The CBI report also shows 10,778 homes were sold in the capital city during the third fiscal month, registering a 4.7% decline compared with the preceding month. They marked a year-on-year surge of 80.1% compared with the 5,986 deals in the corresponding month of last year.

The average price of each square meter of a residential property in Tehran stood at 189.48 million rials ($957) during the month under review, showing an increase of 42.5% over last year’s same month, as average prices were registered at 132.99 million rials ($671) then.

Home prices in the capital city increased by 11.6% compared to 169.72 million rials ($857) in the second month of the current year.

The CBI data also show that during the month ending June 20, newly-built residential properties up to five years old constituted the highest proportion of deals at 38.9% (or 4,194 deals), down by 0.8 percentage points compared with the same month of last year.

That lost share was added to homes six to 10 years old and those above 20 years. Homes with a lifespan of six to 10 years and those above 20 years accounted for 18.9% and 12.5% of total deals respectively.

The share of deals involving homes that were 11 to 15 years old also decreased from 13.4% of the total deals of last year’s same month to 12.7% this year. Homes between 16 and 20 years posted a share of 17% of total deals, compared with 17.1% in the same month of last year.

The distribution of dealt properties shows that among Tehran's 22 districts, District 5 grabbed the highest share of total deals at 15.5%. It was followed by districts 2 and 4 with a respective share of 9.1% and 8.8%.

All-in-all, 10 districts (five, two, four, 10, 14, seven, one, eight, 11 and three) grabbed the lion's share of the deals at 73.3% with the remaining 12 districts holding a 26.7% share.

Among Tehran's 22 districts, District 1 registered the highest average home price of 412 million rials ($2,080) per square meter. District 18 offered the capital city's cheapest homes with an average per-square meter price of 88.9 million rials ($449). The aforesaid numbers show a respective increase of 53.6% and 47.6% YOY.

Residential units with an average price range of 100 million rials ($505) to 120 million rials ($606) per square meter were the most popular in Tehran during the Iranian month under review, as they grabbed 10.4% share of all deals. They were followed by homes priced at 120 million rials to 140 million rials ($707) per square meter with a share of 10.1%.

From the total number of deals, 55.7% belonged to homes cheaper than the average per-square meter price of the city (i.e. 189.5 million rials or $957).

Residential units with a floor area of 50-60 square meters and 60-70 square meters registered the highest number of sales with a 14.1% share of total deals.

Homes with an area of 70-80 square meters and 80-90 square meters stood at second and third places with shares of 11.9% and 9.9%, respectively. All-in-all, residential properties with an area of less than 80 square meters had a 52.6% share of total deals.

CBI data further show Tehran’s homes worth between 6 billion rials ($30,303) and 8.5 billion rials ($42,929) were the most popular with a 14.4% share of total deals. These were followed by homes with a price tag of between 3.5 billion rials ($17,676) and 6 billion rials with a share of 14.2% of total deals.

Collectively, homes valued under 13.5 billion rials ($68,181) had a 50.4% share of total home deals in Tehran during the third month of the current year.

During the three months of the current Iranian year that started on March 20, the number of home deals finalized in Tehran totaled 23,331, which shows an 8.3% growth year-on-year.

In the same period, the average price of each square meter of a home in the capital stood at 170.72 million rials ($862), signaling a YOY surge of 37.5% compared with the three months of last year.