Issue No. 602
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5 - 11 September 2002 Issue No. 602 Features |
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| Published in Cairo by AL-AHRAM established in 1875 | Recommend this page | ||
Poor housing
IN THEORY, the mortgage law is supposed to make home-ownership accessible to the poor -- people like Tarek, a tiler. He, his wife and their two babies live with his mother in her three-room apartment in Imbaba. He is just one of millions of low-income individuals who cannot afford a home of his own. These people are supposed to have recourse to the Fund for Subsidised and Secure Real Estate Financing Activity, which is stipulated in the law. And while a presidential decree establishing the fund has been approved by the Cabinet and is soon to be issued, few details have been disclosed.
Click to view captionSlum housing is the fate of one child too many Essentially, the fund will bear a portion of monthly mortgage payments for low-income individuals.
According to the law, low-income individuals wishing to receive support to buy "economic", or inexpensive, housing should present a request to one of the offices of the Fund for Subsidised and Secure Real Estate Financing Activity. Requests should give a description of the unit and its location and include a letter from the owner declaring that he agrees to sell the property, a certificate from appraisers stating the value of the unit, a certificate stating the prospective buyer's annual income and any other documents the fund might require.
The time frame for the evaluation of requests is one month and funding should be forthcoming within 15 days of approval.
The low-income category comprises people earning less than LE9,000 annually, if unmarried, or less than LE12,000 if married with children. Loan payments are not to exceed 25 per cent of an individual's income.
The fund is to be sustained, among other things, by a sum to be allocated by the government as well as subscriptions paid by both the financier and the buyer.
The law also stipulates that the state should allot plots of land for economic housing and that it will bear half the cost of the utilities servicing those units.
Another proposed method of supporting low-income housing is to offer loans at subsidised interest rates. One way of providing such low-interest loans, experts argue, would be to bring down the reserves ratio banks are obliged to deposit with the Central Bank of Egypt. Bankers feel that the CBE-set reserve/deposits ratio is too high, and that bringing it down would release monies for low-interest housing loans.
According to Essam Rashad of the Ministry of Housing, people in lower income brackets will be at the forefront of those benefiting from the law. The ministry currently owns 35,000 units that it could start allocating.
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