Necessity of emergency housing construction – Tejaratnews

Zeinab Mokhtari/ Tejarat News, the examination of the rental market control theories presents a variety of solutions to the authorities, some of which are not applicable in the Iranian housing market; However, the most successful solutions have generally been incentive solutions based on increasing production and supply. This is despite the fact that the Iranian rental market case has always led to punitive approaches.

Punitive approach

This punitive approach has been reflected in the tax on empty houses for some time; At the same time, the roots of empty houses and the withdrawal of owners from the mortgage and rental market are not addressed. During the last three years, the inflation rate has grown strongly, so that sometimes the prices of all kinds of goods and services in different markets have increased momentarily. This trend has naturally discouraged the owners from the supply in the hope of further increasing the rental price.

Meanwhile, instead of focusing on the failed empty house tax plan for more than two years, the government could focus more seriously on production and increasing supply so that housing and rent inflation can be controlled in a more rational way. Because according to the mechanism of supply and demand, naturally, whenever the supply increases and meets the market demand, the prices are adjusted. At the same time, the taxation of empty houses in Iran does not consider the deduction of the main costs such as maintenance and repair, which is an encouraging approach.

The need to pay attention to production

Housing economics experts consider the production option to be one of the most basic ways to control the rent market. At the same time, the review of housing statistics shows that the number of construction permits decreases every year. According to statistics, the number of house building permits this spring has not even reached 100,000, while it is said that the country needs one million new residential units every year. This statistical comparison shows how thirsty and seriously lacking the Iranian housing market is.

In the meantime, although all governments offer various plans to water the housing market, none of them have been able to respond to this need so far. Raeesi’s national housing movement plan has made less than 10% progress on the ground at the beginning of the second year of his administration, and from the very beginning it has sounded the alarm of the failure of housing promises.

Strengthening the supply side in leading markets

In countries such as America, Germany and Sweden, which have large and progressive rental markets, various methods are used to strengthen the supply side. In these markets, rental housing is generally offered by both the private and public sectors, and each serves a different target community. Housing construction by the private sector, along with controlling and adjusting the housing market, can also prevent the damage caused by the wandering of large capitals and lead them to the field of housing construction.

The government can pave the way for production in this direction by creating a system in line with the goals of supporting safe, livable and affordable housing. This support system can include the elimination of bureaucracy and financing through the provision of appropriate facilities.

The government can also take action to enter the field of rental housing, the target community of which will be low-income households. Houses that are built only for rent and the government can cover the needs of a large part of households without housing by regulating and determining the rent price.

Strengthening the demand side

Although the effects of strengthening the supply side and increasing production compared to the demand side are always more stable, appropriate and less risky, but at some points the demand side needs serious help. Accordingly, governments may decide to help tenants pay housing costs by providing facilities. All kinds of government loans, housing subsidies, facility interest subsidies, additional income support, tax exemptions and other such cases can be considered as government support from the demand side. An example of these cases that has been implemented in Iran is the mortgage loan. Of course, due to the lack of sufficient information from the parties to the contract, this method has been misused and deviated from its true path.

Control law approaches

Housing economics experts say that the government is obliged to enter the rental market as a regulator, just like any other market. However, rent control laws must consider at least three important axes; One of these cases is creating a distinction between new and improved rental units and old units. Meanwhile, it is better to write rental contracts for a period of more than one year without increasing the rent. This action can contribute to the social stability of neighborhoods and stability in the lives of tenant families. However, the non-increase of rent in short-term rental contracts in Iran, due to the double-digit annual inflation, will not be able to be implemented and likely accepted by the owners, and even if the government insists on its implementation, it will face resistance from the owners and evasion of the laws. . For example, in the simplest solution, the owner increases the amount of the initial mortgage enough to cover the annual inflation.

Operational solutions

But in the end, due to the current state of the government and the serious lack of financial resources, which has undermined the government’s construction plans, we cannot hope for financial reinforcement of the supply and demand side from the government. As a result, the only practical solution to achieve the goal of controlling the rental market can be found in facilitating construction by the private sector. In addition to this factor, of course, the government needs to spend more energy on controlling the inflation rate so that the work in the area of ​​rent inflation control becomes easier! The rate of rent growth over the past year (until the end of October) in Tehran and all urban areas was 40.9 and 46.8 percent, respectively. At the same time, the annual inflation rate was equal to 42.9% until the end of October. This trend indicates that the rental price follows the inflation rate. It should be noted that the annual inflation rate in September was 42.1% and acted as a driver of housing and rent inflation. The results of this overview show the control of the inflation rate as the main task of the government to organize the housing market, including the rental market.

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