Tuesday,17 July, 2018
Current issue | Issue 1356, (10 - 16 August 2017)
Tuesday,17 July, 2018
Issue 1356, (10 - 16 August 2017)

Ahram Weekly

More affordable housing

Affordable housing units are costing more, but they are still attractive to low- and medium-income earners, reports Ahmed Kotb

More affordable housing
More affordable housing

The Ministry of Housing and Urban Communities announced the launch of a new offering of affordable housing units last week as part of its social housing programme.

About 125,000 units will be made available in 22 governorates and new cities, even if the prices have gone up in comparison to previous years. Officials attribute the rise to the floating of the pound and the subsequent increase in the prices of building materials.

The 90-metre-square apartments are now priced at LE184,000 instead of LE154,000 for similar apartments offered in 2015 and 2016 under the same programme. Down payments have slightly risen to LE11,000 from LE9,000. The minimum monthly instalment for the repayments of loans is LE590.

Other financial requirements for those wanting to buy the new units have also moved upwards, including the maximum income for married and unmarried applicants, to be set this time at LE4,750 instead of LE3,500, and LE3,500 instead of LE2,500, respectively. This should allow more people to be eligible for the purchase of the units.

Moreover, the banks will now allow those who earn up to LE2,100 a month to pay five per cent interest on their mortgages under the social housing programme, instead of the LE1,200 previously. Those who earn more will pay seven per cent at a fixed interest rate for up to 20 years. 

The housing units and bank financing offers have been attracting a growing number of people to apply, since the units are some 20 to 25 per cent cheaper than ordinary units in the same areas, according to Mai Abdel-Hamid, head of the Mortgage Finance Fund (MFF). 

Applications will be accepted from 20 August and will last for one month. They can be done electronically for the first time through the MFF’s website, and the applications will then be examined and subjected to a random draw, as was the case for previous offerings.

The number of applicants had in the past far exceeded the number of units available under the same programme over the last two years.

The paperwork needed to apply for the new housing units includes a photocopy of a national ID card, an electricity bill, an official document stating income not exceeding LE3,500 for the unmarried and LE4,750 for a family, a marriage certificate, birth certificates, social insurance certificate, a photocopy of a receipt for LE11,000, and a photocopy of a receipt proving payment of LE148 for inquiries made by the MFF to check income and other matters.

It is not possible to qualify for more than one unit under the programme, or for any other Ministry of Housing projects targeting low- and medium-income earners. Five per cent of the units are to be allocated to those with disabilities, giving priority to those with lower incomes.

This is the ninth announcement of units made available through the social housing programme, which was introduced in 2014 to construct one million units over five years at an initially estimated cost of LE165 billion.

Some 220,000 units have been completed thus far, with more than 100,000 people already receiving their apartments. A further 280,000 units are under construction, according to the ministry’s website. 

While eligible applicants are supposed to receive their apartments one year after paying the down payment, there have been cases where the time has stretched to over a year. The government aims at delivering a total of 656,000 affordable housing units by the end of 2018.

A $500 million loan was made to Egypt last year by the World Bank to contribute to building the housing units, and LE1 billion was allocated to the social housing projects by the Long Live Egypt Fund under a presidential decree last year. 

The fund was created by President Abdel-Fattah Al-Sisi in 2014, and it has since been receiving donations in support of Egypt’s development. 

The social housing programme has been growing steadily, according to Abdel-Hamid, because the payments made by those benefiting from the system have been regular. “We were delivering about 300 units per month, and now we are close to 600,” she said, adding that approximately 85,000 people had taken out mortgages under the programme, estimated at LE7 billion.

Complaints have mainly regarded delays in delivering the units. Ragab Fathi, an applicant who spoke to Al-Ahram Weekly, said he had applied for an apartment in Mansoura in June 2015 and received a letter of eligibility which he had followed by depositing a down payment. However, he has not yet received the apartment. 

“When I call to complain, they reply by saying that some facilities have yet to be finished,” Fathi said.

Those who have received their units have also complained about a lack of transport as the areas in which the units are located are sometimes far from city centres and main roads.

Abdel-Hamid said that more units would be delivered starting at the end of September, with the priority being given to early applicants and families. “The apartments are delivered to the owners only when all the facilities and services are ready, and the owners have the right to complain and receive the apartment later if everything is not yet fixed,” she said.

She explained that some projects had not been delivered on time due to economic difficulties and the floating of the pound that had affected the cost of units built under the project and disrupted the construction process.

More than 40,000 units are available in 6 October city, according to Abdel-Hamid, and these should be enough for all eligible applicants, unlike in other areas where units are more limited. 

“There are land scarcities in many areas, especially in the rural governorates, where we cannot meet the demand for social housing units,” she stated, adding that applicants were instead given the choice of an apartment in the nearest project to their current residence.

The Ministry of Housing also announced last week a new project called Sakan Masr (Housing Egypt) through which more privileged housing projects will be built. Apartments available through the new scheme are 110 metres square in size, and prices can go up to LE450,000 depending on the area where the unit is located. 

According to the ministry’s website, 10 per cent of a unit’s total cost will be paid upon allocation following a draw, and the rest should be paid either directly without a mortgage over five years or with a mortgage over 15 years at an 8.5 per cent interest rate.

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