Tenants Receive $160m in Security Deposit Loans

EghtesadOnline: More than 39 trillion rials ($160.82 million) in security deposit assistance loans have been paid to 343,444 applicants as of Jan. 27, a deputy minister of roads and urban development said.

News ID: ۷۸۵۸۸۳

01 February 2021

“The deadline for offering security deposit assistance loans has been extended until Feb. 18,” Parvaneh Aslani was also quoted as saying by IRNA.

The interest-only security deposit loans worth 500 million rials ($2,061) in Tehran, 300 million rials ($1,237) in large cities with a population of over one million, namely Mashhad, Isfahan, Karaj, Shiraz, Tabriz, Qom, Ahvaz and Kermanshah, and 150 million rials ($618) in other Iranian cities will be paid in the name of tenants to landlords.

Renters of homes with an area of less than 75 square meters in Tehran and 90 square meters in other cities will qualify for this type of loan. The newlyweds of the current Iranian year (started March 20, 2020), women breadwinners, those who do not have a property in their name (since the year ending March 2006 and households with five members as well as those supported by charitable organizations such as Imam Khomeini Relief Foundation and State Welfare Organization are specific target groups of security deposit assistance loans; single persons and the self-employed won’t receive such loans.

An official contract with the valid tracking code needs to be finalized between the landlord and renter before the banks can begin the lending process. Workers with fixed income can provide employment verification letter from their employer to the banks and get the loan without any guarantee.

For others, promissory notes or Justice Shares (shares of government-owned companies that were given to the six lowest income deciles of Iranians 10 years ago) can be used as collateral for the loan.

In the absence of either, the borrowers need to introduce a guarantor to the bank. Registration for security deposit assistance loans started on July 25, 2020. Fifteen banks were introduced on Aug. 10, 2020, as the designated banks to offer these loans.

“A total of 200 trillion rials ($824.74 million) out of the 750-trillion-rial ($3.09 billion) coronavirus bailout has been allocated to low-income renters as security deposit assistance at the lending rate of 13%,” Governor of the Central Bank of Iran Abdolnasser Hemmati said this past August.

Urban Rent Inflation at 26% in Q3

The average Consumer Price Index for housing rent levels in urban areas during the four-quarter period ending Dec. 20, which marks the end of the third quarter of the current Iranian year (fall) increased by 26% compared with the corresponding period of last year.

The Statistical Center of Iran had put the inflation rate for the preceding quarter (summer), which ended on Sept. 21, at 24.3%.

The highest inflation was registered for Chaharmahal-Bakhtiari Province with 32.8% and the lowest rate was posted for West Azarbaijan with 13.3%.

According to the SCI report, CPI for rent levels in urban areas (using the Iranian year to March 2017 as the base year) stood at 209 in the third quarter of the current Iranian year (Sept. 22-Dec. 20), indicating a 6.8% increase compared with the previous quarter.

SCI had put the quarter-on-quarter rent inflation rate for the preceding quarter, which ended on Sept. 21 at 11.8%.

West Azarbaijan and Sistan-Baluchestan provinces registered the highest and lowest quarter-on-quarter inflation rates for tenants in urban areas with 19% and 3.9%, respectively.

The consumer rent price index in urban areas increased by 28.4% in Q3 over the same quarter of last year.

SCI had put the year-on-year rent inflation rate for the preceding quarter at 28.9%.

The highest and lowest inflation rates on a year-on-year basis in the third quarter of the current year were posted by Kermanshah with 38.6% and Sistan-Baluchestan with 12.7%.