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EghtesadOnline: A total of 9,070 loans from the resources of the "Housing Savings Account" scheme of Bank Maskan, the agent bank of Iran’s housing sector, were granted to applicants planning to purchase new homes in undeveloped urban areas in the last fiscal year (March 2018-19).

According to Mohammad Ayeeni, a board member of the Urban Regeneration Company of Iran, the figure shows more than a 97% increase compared with 4,545 loans granted in the Iranian year ending March 2018, HIBNA reported. 

“Mortgage loans granted to prospective new homes buyers in undeveloped areas accounted for 15% of total HSA loans granted to applicants last year compared with 10% in the year ending March 2018,” Financial Tribune quoted him as saying.

“Plans are to increase the number of mortgage loans for buying new homes in such areas to 12,000 by the end of the [fiscal] current year [March 19, 2020].”

Ayeeni noted that a new initiative will be rolled out soon for providing prospective home buyers with the opportunity to take out mortgage loans for the upfront purchase of homes in undeveloped areas as soon as they open HSA deposit accounts at Bank Maskan. 

“Once approved and implemented, this new step will help expedite the revival of undeveloped areas, increase first-time home buyers’ chances of owning a house, which will in turn invigorate the real estate market,” he said. 

First launched in June 2015, the HSA initiative targets applicants from middle-class backgrounds and people living in old urban areas. The scheme requires applicants to make an initial deposit of 400 million rials or $3,518 and wait out the one-year maturity period for loans with a ceiling of 800 million rials ($7,036), plus the depositor’s down payment, in the capital Tehran. 

In towns with a population of over 200,000, the cap on the loans is 600 million rials ($5,277). Buyers in towns with a population of fewer than 200,000 can apply for a maximum 400 million rials. 

The HSA initiative, the brainchild of former roads minister, Abbas Akhoundi, targets mostly first-time prospective homebuyers from middle-class backgrounds and people living in old urban areas. It has been aimed at increasing home ownership among youth population.

When the scheme was first launched, the loan’s interest rate was set at 14%. In February 2017, after a directive by the Money and Credit Council, they were reduced to 9.5% in general cases and 8% for those who wanted to buy a home in rundown parts of the cities. These interest rates make HSA loans cheapest in the country. 

It is said to be a self-sustaining fund since all the resources it absorbs are redirected to boost the financial strength of Bank Maskan for it to be able to support prospective homebuyers through cheap facilities.



Renovation of Undeveloped Areas on Agenda

About 2,700 neighborhoods, spanning 140,000 hectares and housing more than 19 million Iranians, are deemed distressed areas in need of renovation. 

Based on the plan envisioned as part of the country's five-year development plans, the government is tasked with renovating 270 neighborhoods a year, meaning that all distressed neighborhoods must be seen to in the next decade.

Based on an executive decree signed by President Hassan Rouhani two years ago, a nationwide urban revitalization scheme was launched, which is slated to be implemented at a cost of 250 trillion rials ($2.21 billion) each year. 

Of this amount, the private sector is set to provide the highest amount of resources at 100 trillion rials ($693 million) while the government and municipalities will account for the rest at 80 trillion rials ($885 million) and 70 trillion rials ($620 million) respectively. 

Akhoundi signed a trilateral agreement with the head of Plan and Budget Organization, Mohammad Baqer Nobakht, and the head of National Development Fund of Iran's board of trustees, Morteza Shahidzadeh. 

The agreement secured 700 trillion rials ($6.19 billion) worth of resources to kick-start urban revitalization projects that are projected to create 300,000 direct and indirect jobs.

Maskan Investment Group signed an agreement with the Urban Renewal Organization of Tehran last year for rehabilitating distressed areas of Iran's capital city.

The cooperation agreement was signed with the goal of constructing residential and commercial units on more than 105,000 square meters of land belonging to Maskan Investment Group in the form of participation in construction projects.

The investment group, which is the parent company of Bank Maskan, has agreed to undertake construction operations on lands located in distressed urban areas, mostly toward the southern parts of Tehran. Many of them are extremely old and even rundown properties, and therefore in immediate need of demolition and reconstruction.

Based on the agreement, the investment group is also tasked with providing advisory services to handle the technical issues of construction and engineering paperwork to receive permits and commence construction.

Conducting field inspections and feasibility studies to obtain the technical details of projects based on neighborhoods, and considerations related to marketing and sales are among other commitments of Maskan Investment Group as part of the agreement.

Maskan Investment Group, as a major force in Iran's housing sector, has so far defined various projects in line with the larger Urban Renewal Plan. For instance, it has projects underway in Tabriz, Ardabil and Mashhad. 

It is also eying other projects in Tehran, Zanjan, Isfahan and Shiraz. The group built about 1,400 residential and commercial units in distressed urban areas of Tehran, Mashhad, Tabriz, Kashan, Isfahan and Hamedan during the fiscal year that ended on March 20, 2018. 

Nematollah Torki, the head of Tehran Management and Planning Organization, announced last year that about 25% of Tehran comprise distressed urban areas with a population of 2.5 million people. 

The extremely poor housing conditions on the outskirts of Tehran have prompted the Ministry of Roads and Urban Development to focus attention on resolving their issues that would, in turn, improve housing conditions inside Tehran. 

Budget deficit has been the main reason hampering work.



HSA Mortgage Applications in Sharp Decline

The average number of accounts opened with Bank Maskan under the Housing Savings Account scheme during the first half of the current fiscal year (started March 21) decreased by 62% compared with the same period of last year to reach 1,500 new accounts per week, according to Mohammad Hassan Moradi, an official with the bank.

The number of new accounts opened in Tehran and towns with a population of over 200,000 has decreased by 25% and 19%, respectively. 

However, a 9% rise was recorded for the number of new accounts opened with Bank Maskan in small cities with a population of fewer than 200,000, he was quoted as saying by IRIB News. 

Nearly 162,000 home loans have been paid under the Housing Savings Account scheme since it was first launched in June 2015 until Sept. 4, 2019, he added. 

It was announced in August that Bank Maskan paid 89,000 billion rials ($760.68 million) in home loans under the Housing Savings Account scheme since June 2015. 

About 595,000 applicants have made deposits with the government-owned bank for its mortgage loan program in the first four years of HSA existence, Bank Maskan CEO Abolqasem Rahimi Anaraki was quoted as saying by HIBNA. 

“In the fiscal 2015-16, a total of 40,000 HSA deposit accounts were opened at Bank Maskan, followed by 135,000 accounts in the fiscal 2016-17. The highest number of HSA accounts opened in one year was in the fiscal 2017-18 with 217,000,” Bank Maskan CEO Abolqasem Rahimi Anaraki said.

“The housing recession of the last fiscal year [2018-19] in Tehran and other large cities on the one hand and home price hikes on the other drove down the number of new HSA accounts from its previous year’s peak to 183,000.”  

Over the first quarter of the current year (March 21-June 21), around 19,000 new HSA deposits were made with Bank Maskan, he was quoted as saying by Fars News Agency.

“From the third month of the fiscal 2015-16 to the year ending March 20, 2019, 575,426 HSA deposit accounts were opened with the bank, of which 310,000 accounts belonged to residents of cities with a population greater than 200,000 and 148,000 accounts were opened by residents of Tehran. Also, more than 117,000 accounts belonged to applicants residing in small cities with a population of under 200,000,” Rahimi said. 


Iran Bank Maskan Housing Sector Mortgage loans Housing Savings Account agent bank Scheme Home Buyers Undeveloped Areas