Owners of 1,639 accounts have received loans worth 285,250 million rials ($1.1 million), the Central Bank of Iran reported.
The interest-only security deposit loans worth 500 million rials ($1,943) in Tehran, 300 million rials ($1,165) in large cities with a population of over one million, namely Mashhad, Isfahan, Karaj, Shiraz, Tabriz, Qom, Ahvaz and Kermanshah, and 150 million rials ($582) in other Iranian cities will be paid in the name of tenants but the sum will be put at the disposal of landlords, IRNA reported.
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 funding. Newlyweds of the current year, breadwinning women, 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 Committee and the State Welfare Organization) are the specific target groups of security deposit assistance loans; single persons and the self-employed won’t receive such loans.
An official contract with the so-called 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 of these, borrowers need to introduce a guarantor to the bank.
Registration for security deposit assistance loans started on July 25. Fifteen banks were introduced on Aug. 10 as the designated banks to offer these loans.
According to Governor of the Central Bank of Iran Abdolnasser Hemmati, a total of 200 trillion rials ($777 million) out of the 750-trillion-rial ($2.9 billion) coronavirus bailout have been allocated to low-income renters as security deposit assistance at the lending rate of 13%.
The landlord is required to return the principal (the original sum of money borrowed) to the bank after a year while renters will repay 12-month installments worth 5.4 million rials ($21) in Tehran, 3.25 million rials ($12) in large cities and 1.6 million rials ($6) in other cities.
During the five months of the current Iranian year that started on March 20, the number of home deals finalized in Tehran totaled 46,458, which shows a 56.9% year-on-year rise.
In the same period, the average price of each square meter of a home in the capital stood at 190.46 million rials ($796), signaling a YOY surge of 49.7% compared with the four months of last year.
Q1 Rent Levels Rise 38% in Tehran
The Statistical Center of Iran's latest report on Tehran's tenancy market shows the average rent prices increased by 38.4% during the current year’s Q1 compared with the spring of last year while they grew by 9.8% compared with the fourth quarter of last year.
The center discloses figures for monthly home rent levels plus 3% collateral legally paid to rent one square meter of residential floor area.
It reported that the average rent prices increased by 38.4% during the current year’s Q1 compared with the Q1 of last year while they grew by 9.8% compared with the fourth quarter of last year.
The minimum price of each square meter of residential floor area rented in Tehran stood at 37,143 rials (14 cents) in District 18 with the maximum being registered at 3 million ($11) in District 3 bringing the average to 557,305 rials ($2) per month.
Compared with the first quarter of last year, the current year’s Q1 rent deals decreased by 41.6%, but they increased by 17.8% when compared with the preceding quarter.
District 5 accounted for the highest number of rent deals with 17.4% and District 16 accounted for the lowest number with 0.9% of the total deals.
SCI reported the average area of total rent deals at 83 square meters and put the average age of rental homes at 14 years.
All figures reported by SCI employ data extracted from the state-run Tenement Management Information System operated by the Ministry of Roads and Urban Development.
Established with the aim of making home purchase and renting deals more transparent, the system legally requires all certified real-estate agencies to register their deals.
As sudden changes in the number of deals in major cities lead to a significant change in prices across a province or the whole country, the report uses a balanced weighted average for its reports to identify real price changes by eliminating the effect of home deals.
The related weights used were based on occupied residential units surveyed during a general census conducted in the fiscal 2015-16.
According to the Central Bank of Iran, the price of rented residential units in Tehran and across urban areas increased by 27.4% and 30.6% respectively during the fifth month of the current year (July 22-Aug. 21) compared with the similar month of last year.
Series of Supportive Measures
The government is taking a series of measures to help tenants against exorbitant price rises.
As a case in point, tenancy agreements signed as of June 29 may not increase rents by more than 25% in Tehran and 20% in other large cities, President Hassan Rouhani said on June 28.
Deputy Minister of Roads and Urban Development Mahmoud Mahmoudzadeh later explained that the 20% increase cap applies to Mashhad, Isfahan, Tabriz, Ahvaz, Qom, Shiraz and Karaj. He added that the cap is at 15% in other Iranian cities.
“There are some exceptions to the rule. The tenant must have delivered on their commitments during their current tenancy term; in other words, they should not be considered tenants in arrears by the judiciary. Moreover, those who have caused financial losses to the landlord won’t be entitled to the new measure,” the deputy minister said.
“Once the landlord legally sells their property during the lease period, the tenant must move out within two months. The final exception is when the tenant refuses to accept the aforementioned legal rent increase. If the landlord asks for a higher rent [than what was approved], the tenant can refuse to pay the rent without facing eviction action.”
Parvaneh Aslani, an official with the Ministry of Roads and Urban Development, noted that landlords willing to sign three-year lease contracts will be granted exemptions from vacancy tax and other prospective tax measures related to the housing sector.