Title: National Housing Initiative Faces Financing Hurdles, Industry Official Reports
Introduction
A senior official from the country’s construction sector has provided a detailed overview of the current state of financing for Iran’s housing projects, highlighting systemic challenges within the current mortgage and loan distribution mechanisms.
Two-Track Financing Structure
Farshid Pourhajat, Secretary of the National Association of Home Builders, outlined that housing project funding 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 track involves standard urban construction and development projects.
Insufficient Banking Support Reported
While the funding framework for the National Housing Movement is clearly defined, reports indicate that banking institutions have not provided sufficient support for these pivotal state projects, according to Pourhajat. For urban construction, Bank Maskan is recognized as the specialized banking entity. However, the current conditions at the bank for facilitating loans are reported to be less than optimal.
Cumbersome Processes and Bureaucratic Hurdles
Despite repeated emphasis on the inadequacies of the current loan distribution methods, no significant changes have been implemented. Pourhajat stated that securing a facility from Bank Maskan is not only difficult due to stringent conditions, but the payment process itself is installment-based and executed through complex civil partnership contracts, a procedure mired in intricate bureaucracy.
Additional Obstacles: “Tas’he” Bonds and Contractual Issues
The official emphasized that obtaining these crucial loans is contingent upon acquiring expensive facility bonds (“Tas’he”). Furthermore, even at the stage of executing approved contracts, numerous problems persist. Consequently, both state-led housing projects and private urban construction ventures are facing serious obstacles and limitations in securing financing and receiving loan payouts.
Increased Costs and a Misaligned Payment System
This challenging process has, unfortunately, drastically increased production costs. Pourhajat simplified the issue: Bank Maskan’s policy requires builders to commence construction first; loans are then released in phases, tied to the physical progress of the project. In effect, the loan intended to initiate a project is practically allocated to its completion. This methodology, initiated in 2022, has seen no change in the bank’s approach or performance since.
Calls for Unanswered Reform
Pourhajat noted that despite official correspondence and submitted proposals to Bank Maskan, no positive or effective action has been observed from the bank, which acts as the primary agent for the nation’s construction sector. Apart from one unfulfilled promise to hold a meeting, the industry’s concerns have yet to be addressed, underscoring a critical need for procedural review and reform to support the nation’s housing goals.