Will there be a 25% increase in executive rent? / What is the impact on the market?
According to Tejarat News, according to the approvals of the market regulation headquarters, the owners in Tehran to extend Rent They only have the right to increase the amount by 25%. According to the decree, landlords in metropolitan areas can add 20% to the rent and 15% in other cities.
But is this decree enforceable for rental ceilings? And what impact can it have on the housing market?
Mahmoud Olad, a housing market expert, told Tejarat News: “This plan has no executive guarantee, for example, landlords can prepare a formal contract or receive some costs separately.”
“In general, there are many ways to escape,” he said. In previous years, rents had risen by 25 percent, but the market has seen more price increases.
The expert said about the effectiveness of this resolution: this 25% increase does not have any special effect. The problem of the rental market is the limited supply and demand, and mandatory decisions do not solve the problem.
He added: “In this case, the supply will also decrease and some people will decide not to rent their property anymore.” Others, who could not afford to rent a house in Tehran and wanted to return to the city, gave up their decision, thinking that prices would fall, and eventually prices would rise.
The impact of the campaign on unconventional rents on the market
On the other hand, according to Hamshahri newspaper, real estate consultants have launched a campaign entitled “No to Unusual Rents” by real estate consultants. According to this campaign, the files of the owners who offer their residential unit at unconventional rental rates in companies will not be accepted.
Regarding the campaign, Olad told Tejaratnews: “Real estate consultants will reduce supply by imposing restrictions on the acceptance of files.” In this case, even if we assume that the owner has no other choice, supply will decrease if there is no change in demand.
He continued: “As mentioned, there is a shortage of supply in this case, which can increase rents.” So this solution may exacerbate the problems.
The expert also commented on the market trend: “Given the increase in bond prices last week, the market is likely to increase the number of transactions.”
Disrupting the balance of the rental market
Earlier, Mansour Gheibi, another housing expert, said of the rent increase ceiling: “Increasing the cost of living is forcing a number of landlords to increase the rent in a way that covers part of the cost.” On the other hand, tenants are not able to buy housing due to reduced capital savings. As a result, demand for rent has increased. In such a situation, it is natural that prices go up.
“In some cases, tenants are forced to reduce their housing and relocate to a lower area due to their inability to pay up-to-date rents,” he said, referring to the imbalance in the rental market. This issue also has social and cultural consequences and endangers the intellectual security of individuals.