Housing Finance Challenges Highlighted by Construction Industry Official
Industry representative details ongoing hurdles in securing project funding, despite national initiatives.
Tehran – Farshid Pourhajat, Secretary of the National Builders’ Association, has outlined the current state of financial resource allocation for housing projects, pointing to persistent challenges in two key sectors.
A Dual-Track Funding System
Pourhajat 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.
While the funding mechanism for the National Housing Movement is clearly defined, reports indicate that banks have not provided sufficient support for these projects. For standard urban construction, Bank Maskan is recognized as the specialized bank. However, Pourhajat noted that the bank’s current conditions for facilitating loans are not optimal.
Complex Procedures and Bureaucratic Hurdles
Despite repeated emphasis on the unsuitability of the current loan disbursement methods, no significant change has occurred. Securing a facility from Bank Maskan is not only difficult but is also disbursed in installments through complex civil partnership contracts, a process laden with intricate bureaucracy.
Pourhajat emphasized that obtaining these facilities is contingent upon acquiring specific loan certificates (Tase’a), and even at the stage of executing approved contracts, numerous problems exist. Consequently, both National Housing Movement projects and standard urban construction face serious obstacles and limitations in the financing and loan disbursement process.
Increased Costs and Operational Delays
This financing model has, unfortunately, significantly driven up production costs. In simple terms, Bank Maskan requires builders to commence construction first; funds are then released in stages based on the project’s physical progress.
“In effect, the loan that should be provided to start a project is practically allocated to its completion,” Pourhajat stated. This procedure, initiated in 2022, has seen no change in the bank’s approach or performance to date.
Calls for Effective Action
Builders are further compelled to acquire expensive loan certificates to access funding. Additionally, the conditions for the installment sales of completed units are not structured to adequately meet the nation’s construction needs.
Pourhajat concluded by noting that despite official correspondence and submitted proposals to Bank Maskan, no positive or effective action has been observed from the bank, which serves as the primary agent for the country’s construction sector, beyond a single unmet promise to hold a meeting.
