Housing Sector Faces Financing Hurdles as Support Mechanisms Fall Short
A senior official from the National Builders’ Association has detailed significant challenges in securing adequate financial support for Iran’s housing projects, despite established governmental frameworks.
Two-Track Financing Structure
Farshid Pourhajat, Secretary of the National Builders’ Association, explained that housing project financing is pursued through two primary channels. The first encompasses government-led projects under the “Housing Production Jump” initiative, also known as the National Housing Movement. The second involves standard urban construction projects.
Insufficient Banking Support Reported
While the funding mechanisms for the National Housing Movement are formally established, reports indicate that banks have not provided sufficient support for these projects. In the domain of urban construction, Bank Maskan is recognized as the specialized bank for the sector. However, Pourhajat stated that the bank’s current conditions for granting facilities are not favorable.
Cumbersome and Unchanged Processes
Despite repeated emphasis on the inadequacy of the current loan disbursement methods, no significant change has occurred. Acquiring facilities from Bank Maskan is not only difficult but is also executed through installment payments and civil partnership contracts—a process burdened with complex bureaucracy.
Pourhajat emphasized that obtaining loans is contingent upon acquiring expensive facility bonds (Tas’a), and even the execution of approved contracts faces numerous problems. Consequently, both state-led National Housing Movement projects and urban construction plans are encountering serious obstacles and limitations in the financing and loan disbursement process.
Increased Costs and Operational Delays
This financing model has, unfortunately, drastically increased production costs. Simply put, Bank Maskan’s policy requires builders to begin construction first; loans are then released in stages based on the project’s physical progress. In effect, the loan intended to initiate a project is practically allocated to its completion. This procedure, which began in 2022, has seen no change in the bank’s approach or performance to date.
Call for Effective Action
Furthermore, builders are compelled to procure costly facility bonds to secure loans. The conditions for the installment sales of constructed units are also not adequate to meet the country’s construction needs.
Pourhajat noted that despite official correspondence and proposals submitted to Bank Maskan, no positive or effective action has been observed from the bank, which acts as the agent bank for the country’s construction sector. Apart from one promise to hold a meeting—which itself did not materialize—no tangible steps have been taken to address these critical issues.