Housing is a social right and is on par with other basic human needs such as education and healthcare. Providing this social right and basic need is one of the main responsibilities of governments. Article 31 of the Constitution also recognizes the right of every Iranian individual and family to have suitable housing and obligates the government to provide the necessary means to implement this principle, with priority given to the weaker and less fortunate, especially rural residents and workers. However, has the government been able to fulfill this important duty in the past forty years?

The Constitution of the Islamic Republic of Iran has mentioned having suitable housing for different segments of the society as a “right” and has introduced the government as responsible for the housing sector and providing housing for all members of the society. However, unfortunately, in recent years, governments have not been able to fulfill their duties properly in providing housing for the people. (1)

The real estate market is the largest economic market in Iran, with over 270 industrial and production sectors and connections to both past and future investments. Nearly one-third of all investments are allocated to this sector. For this reason, the housing sector is considered the “driving engine” of economic development, and the government is striving to stimulate this sector in order to pull the economy out of its current recession. Today, the government has reduced its presence in the housing sector to less than 5%, adopting a market-based approach to solving the housing problem, unlike other successful countries. However, due to various reasons, the market cycle has not been able to properly address the various factors involved in providing housing in a complete and efficient chain.

Housing is a social commodity and the government is obligated, according to the requirements of the constitution, to provide dignified housing for members of society. In the world, even in the most liberal countries, the housing sector is subject to profit-driven mechanisms and market forces, just like other social commodities such as education and healthcare. In Iran, the housing sector has also been handed over to the market, just like other social commodities. When it comes to social commodities, it is the government’s primary responsibility. If this profit-driven paradise did not exist in the housing sector, a lot of capital would have gone to the industrial sector and flourished there, but now the activities of the industrial and production sectors have been weakened due to the overall economic conditions and sanctions, while the profits from real estate have increased.

When speculative tendencies dominate the market, housing is not built to meet the social needs of the people and provide shelter, but rather for speculation. That is why we see that houses lack quality and have a lifespan of only twenty-five to thirty years. Supporters of the free market have spread the cliché that if we leave housing to the market, not only will quality housing be built, but also the housing crisis will be solved and it will be more affordable for the people. However, with the current situation and the failure of projects, we can no longer support this perspective.

Parvaneh Aslani, the director general of the Housing Economy Office of the Ministry of Roads and Urban Development of Rouhani’s government, had announced that the annual real estate production is around 270,000 to 280,000 units. The majority of these houses have been built by the private sector or landowners themselves. The annual demand for new housing in Iran is also around 700,000 units. Mahmoud Mahmoudzadeh, the deputy minister of roads in Hassan Rouhani’s government, also stated that there are 8.5 million “households” in Iran who are renters. Considering the existence of 26 million households, approximately one-third of Iran’s population are renters.

Performance

The government is involved in the housing sector.

If we examine the performance of the government and subsequent governments after the revolution, we come across several different periods. One period is related to intense and direct intervention in the housing market, where after the nationalization law, the government’s hand was left open to own and allocate a large portion of urban lands (bare and vacant lands) and this was not limited to just land, but the government also entered the field of building materials and the policy of distributing affordable building materials at government rates was also considered, and we saw this in the distribution of production factors as well. In summary, the government heavily intervened in the land and building materials sectors.

In addition to these, the housing construction industry was also given attention by the government, and this was one of the policies that were heavily intervened by the government until before the first and second plans, which of course we did not have any plans until then.

In the third program, after reviewing what had been done, the government concluded that this intervention is not appropriate in some areas and causes distortion in the market and gives wrong signals to the market. On the other hand, it does not provide accurate information and also does not cover low-income individuals. Therefore, the government moved towards minimal intervention and implemented the minimum level of intervention in the housing sector. During the third program, the main policy was to provide land to the people at market prices and the government’s entry into the housing market, which led to a sharp increase in housing and land prices and a move towards extreme policies in other spectrum of policies.

In this period, the policies that oversaw the distribution of construction materials at government prices were stopped, and the policy of transferring land from individuals to mass builders was adopted, and the land was sold at market prices; while the government’s construction is very poor and slow, and it is also very expensive. (3).

Therefore, the government construction industry decreased to a minimum and since it did not have much performance in terms of quantity, the free market ultimately dominated the housing sector, which initially had no negative consequences. However, with the increase in prices, it caused income groups one, two, three, and four, who naturally were included in all programs, to almost be unable to provide housing.

A portion of these groups, who had housing (either through ownership or rent), remained in the same place and new individuals who were added to them continued their lives in densely populated residential units. In big cities like Tehran, income brackets of five and six were added to them, which, along with the younger population, reduced the supply of housing for low-income and young groups, leading to an increase in demand and subsequently, an increase in prices. This situation caused the government to not have a specific plan for the groups that were being excluded from the market.

Therefore, it must first be determined how we can help them and what balanced policies will lead us to an optimal combination of market forces and government intervention.

Ismaeili Zadeh, a representative of the parliament and a member of the Construction Commission, believes that the government’s role in the housing sector was 100% present in the early days of the revolution. “In 1979, it was decided to allocate land at regional prices for two purposes, because land in Tehran and major cities has a high value and for some reasons, some may build units with access to resources, which happened and because the government had set the price based on marginal prices, it had a negative impact on the housing situation in the country. The private sector also competed with the government in this sector due to the government’s high presence.” This same method can be seen in determining the prices of vehicles. The entry of exclusive cars monopolizes the market and production is in the hands of specific producers who determine the prices based on market margins.

Although there are various factors that have different coefficients in the housing sector, overall, the main issue that arises is the capital market, economy, and financial resources – which is considered the most important factor – for which special solutions must be defined. This is because in new cities, which will reach a number of thirty and eighteen of them are currently under construction and population growth, lands are offered entirely by the government and only the cost of preparing them must be paid. However, when the private sector enters and takes over the land for development, even though a percentage of it is pre-sold, it still faces financial problems and cannot complete the project within a specific time frame. When asked about the reason for the delay in the project, the financial issue is brought up.

Repeating a failed experience.

The government has implemented policies in the field of housing during various periods after the revolution, which according to experts, few of these policies have been able to solve the housing needs of the lower classes of society in the early years of the revolution. In other words, contrary to what is stated in the Constitution, the priority of the government’s social housing plans in Iran has not been for the needy – as the Constitution states, for rural residents and workers – and this segment of society has not had the ability to participate in such plans and programs; therefore, the government has not been able to fulfill its duty towards providing housing for the underprivileged. Ultimately, a large portion of household expenses today is spent on rent. According to statistics, the share of housing expenses in the urban household basket is between sixty to seventy percent. This means that families have to sacrifice other essential expenses such as healthcare, education, and food in order to afford the high rent costs. Needless to say, in a situation where working

The main problem in the housing sector is the lack of diversity in housing options. This means that all housing development policies in the country are based on “private housing”, which has resulted in the inability of social housing programs to effectively help the lower classes of society, despite the efforts and support being provided.

After the end of the eight-year war between Iran and Iraq, the discourse of privatization, which was specifically referred to as “structural adjustment policies”, caused the limited reserves of social housing to be depleted. In Iran, we had a social housing policy in general, but these policies were very limited and only for certain groups; such as organizational houses that the government used to provide for its employees, but even these policies were restricted with the spread of privatization discourse. (4).

Mahmoud Ahmadinejad’s government intended to build four million homes in the “Mehr Housing” project and claimed that by implementing this plan, the housing problem in Iran would be completely solved. However, these promises not only did not come true, but many of the residential units built on the outskirts of cities lacked even the most basic necessities of life such as water, electricity, telephone, and necessary infrastructure such as clinics and schools.

At first, it was planned for the Mehr housing land to be ninety years old; this means that the legislator had come to the conclusion that the housing issue could not be solved through private housing and this was one of the justifications for the Mehr housing plan. However, unfortunately in 2020, the permit for land issuance was issued. In any case, the sale of land created income for the government and this caused the legislator to abandon their initial policy.

The issue is that when the permission for land sales was issued, the housing prices also increased. If the legislator had remained committed to what they had initially determined and the land of these houses was not sold, at least the Mehr housing units would not have entered into profit-seeking processes. The fate of the government’s social housing policy, especially “social housing”, is still unclear and despite numerous trials and errors, the housing program for the underprivileged is still on the agenda for housing development planning.

With these characteristics, it is not possible to be optimistic about the comprehensive plan for housing production that is being pursued during this period, with the goal of constructing one million homes annually. These plans all emphasize housing production. In principle, according to the market system, as supply increases, prices should decrease. Therefore, if housing production increases, supply will also increase and prices should decrease. However, another problem in the housing sector is distribution. In our country, we have a large number of empty and second homes, and despite the fact that a law has been passed to tax empty homes, we do not have enough data and a comprehensive information system to enforce it. Additionally, the tax rate is low enough that many individuals do not have the motivation to enter the rental market with their homes.

Ahmadinejad’s government spent forty-two trillion tomans to build Mehr housing. Some experts doubt these plans and say they are similar to slogans that were raised by revolutionary authorities in the early days of the revolution, saying “Don’t buy a house, we will make everyone a homeowner.”

According to these experts, post-revolution governments have proposed idealistic plans without considering resources and financial capabilities. The “Social Housing Plan” which was introduced two decades ago and was supposed to build 50 square meter units for low-income groups, is an example of such visionary plans. This plan was quickly forgotten and plans such as “Mass Housing Construction” were put on the government’s agenda, which are also remembered as unsuccessful experiences.

One.‌

Million.

Home; Big stone.

State.

The Minister of Roads and Urban Development of the government, Mr. Raeisi, has emphasized the government’s plan to build one million homes annually and has claimed that Iran has entered negotiations with some foreign countries for industrializing residential units. The method of cooperation with them will be through “barter with oil, finance, or payment.”

Rostam Qasemi’s statements in response to a reporter’s question about the negotiations between Iran and China in the field of mass housing construction come at a time when even the president’s colleagues have doubts about the government’s policies and emphasize the impracticality of the proposed solutions. Eghbal Shakery, a member of the Civil Engineering Commission of the Parliament, had announced that the Minister of Roads and Urban Development had also raised this issue in a parliamentary session regarding Chinese companies, but investigations by the Hamshahri newspaper from officials of the Ministry of Roads and Urban Development and inquiries from informed sources showed that “no negotiations” have been conducted with Chinese companies or other countries so far.

“Industrialization of Residential Units” is actually a method of construction through prefabricated structures; where ninety-five percent of the structure is prepared in a factory and transferred to the project site for assembly; however, Iran had previously attempted this method with the help of Turkish companies in the “Mehr Housing” project and had faced failure.

In this regard, Iraj Rahbar, former chairman of the Association of Builders in Tehran province, has criticized this method of housing and said: “Unfortunately, the Minister of Roads and Urban Development does not have enough information about the facilities and capabilities in the construction industry.” He continued, “In Pardis, ten thousand units were built in the form of tunnel molds, which unfortunately, due to lack of demand for ‘Mehr Housing’ and the continuation of the project, caused builders to abandon the use of this technology and some of the molds were sold at waste prices.” (6).

Mr. Leader also responded to the release of reports on the government’s efforts to bring Chinese companies into the housing market and industrialization of residential units, saying: “We used Chinese companies on the Tehran-North freeway, but after twenty years they abandoned the project halfway and left Iran; unfortunately, such cases have not taught us a lesson.”

Rostam Qasemi’s statements about cooperation with foreigners through “oil barter, finance or payment” come at a time when China has not directly purchased any oil from Iran for over a year and the government is facing a severe budget deficit and does not have the ability to finance the construction of four million new homes. On the other hand, estimates show that the necessary budget for building one million homes is not only more than the entire government budget, but also more than the total liquidity in the country.

Mr. Ghasemi says that the financial resources for the Housing Production Leap Plan are 330 trillion tomans. Previously, media close to the Sepah and the government of Ebrahim Raisi had claimed, based on the statements of officials and experts in the housing sector, that the cost of building one million housing units is estimated at around 400 trillion tomans. This is while, according to statistics from the Central Bank, the average price per square meter of housing in Tehran reached 60 million tomans in September 2021, which is more than eight times the amount that Mr. Ghasemi and pro-government media have considered for building each square meter of housing. The price of housing in Iran has increased more than eight times in the past eight years.

One of the main obstacles to achieving the construction of one million residential units per year is the performance of the banking system in providing housing facilities. Despite nine months passing since the date of the directive issued by the Central Bank, based on statistics received from a supervisory institution, twenty-two out of twenty-eight active banks have not provided any facilities for housing construction under the National Initiative.

Based on this, the banking system has only provided a total of thirteen trillion and five hundred billion tomans in loans to the housing sector, the majority of which has been paid by the Housing Bank. Interestingly, in the past six months, the banking system has only paid seven trillion tomans in loans, equivalent to one eleventh of its legal obligation, to the National Housing Movement and practically does not intend to fulfill its duty of financing the National Housing Movement.

Economic housing experts believe that with the inclusion of service, administrative, commercial, health, green space, water, electricity, gas, asphalt, street, and landscaping costs, the construction cost of one million housing units is approximately four trillion tomans. This amount is also more than the total liquidity in Iran and it is clear that with the entry of this amount into the economy, it will act as a catalyst for inflation and will destroy the entire economic structure of Iran.

Suggestions.

My policy.

With these characteristics, it is not possible to be optimistic about the comprehensive plan for housing production that is being pursued in this period. Therefore, policymakers must proceed with the assumption that the housing policy cannot solve the problem. These productions are either outside the urban areas or cannot solve the problem of working classes and lower layers of society, or their size is so high that they do not meet the housing needs.

The main question that arises is what plans the government should pursue that target the lower classes of society? Initially, the government should distance itself from the policy of “private housing” and implement various models of social housing projects. The current demand for housing is for single individuals, while in other countries the policy is to reduce the size of housing. Many countries have moved towards the production of public housing; houses that provide both private space and communal space. This can solve the housing problem for individuals who cannot afford to rent a separate house.

On the other hand, the government can provide land for companies for free and these companies can build houses in bulk and be obligated to rent out these houses for a period of, for example, twenty to twenty-five years and then be allowed to buy and sell them.

Another point is that there is no housing market like Iran where landlords have all the power. Tenants should also have rights. For example, the duration of house contracts can be extended from one year to five years, or a percentage can be determined from the beginning for increasing rental prices.

One of the successful countries in the field of housing is Germany, where fifty percent of the population are renters. However, because renters are legally protected in these countries, they do not face any problems; meaning, in such a social system, various forms of support are available for people and there is no negative impact on the social status of these renters. Therefore, we should move towards this direction. It is good for individuals to own their own homes, but the reality is that the implementation of housing policies has not been able to solve the housing problem, and now we have reached a point where eighty percent of people are spending their entire income on rent and have nothing left. This situation gradually endangers social security, and it has already happened and it is not clear what consequences it will have in the future and what kind of issues it will bring. The emergence of phenomena such as sleeping in parks, sleeping in containers, and even sleeping in graves are all clear signs of the sharp increase in housing prices

Footnotes.

1- Examining the role of the government in the housing sector, the world of economy, 28 Bahman month, 1385.

2- Reasons for the failure of governments in housing support plans, ILNA News Agency, 25 Tir 1401.

3- Changes in Housing in the Four Decades of the Islamic Revolution, Economy News, 28 Bahman 1397.

4- Have the prices of National Housing Movement houses become billions? Khabaronline Farsi, 21 Farvardin 1401.

5- Ahmadinejad’s housing plan failed, Rouhani is building social housing!, BBC Persian, 21 Farvardin 1393 (April 10, 2014).

6- New phenomenon of “grave-sleeping” instead of cardboard-sleeping, at the Young Journalists Club, 9 Dey 1395.