The housing crisis … temporary solutions in the absence of a long-term policy Phalanges

The cessation of disbursement of subsidized housing loans has exacerbated the economic and social crisis in Lebanon, with the adoption of "temporary solutions" and the total absence of long-term housing policies. Vacant and offered for sale 50 thousand apartments.
The housing loan crisis began in October 2017 when Bank of Lebanon Governor Riad Salameh issued a circular forbidding banks to use part of their funds deposited with the Central Bank as a mandatory reserve for bank loans. finance projects related to certain productive economic sectors (including housing) because of their use. The quota allocated to it by the incentives provided by the Bank of Lebanon at a record speed. This caused a housing crisis, which had a major negative impact on the real estate sector as a whole. Critics have criticized the state's absence in this area and the lack of a public housing policy that takes into account and provides a radical solution to housing for the middle clbades, rather than use loans that are not always available.
Given the current housing lending crisis, it appears that the temporary solution needed at this stage is the Public Housing Corporation, which covers 60% of housing loans.
The reason for the suspension of loans by the public company is the excessive use of reserve requirements by commercial banks, which have granted subsidized loans of up to a billion pounds (about $ 650 million) over a very short period of time. period, said Rony Lahoud in Asharq al-Awsat. In addition to Central Bank Circular 503, which prevents net lending by the bank to the private sector in Lebanese pounds, more than 25% of the total customer deposits in Lebanese pounds.
Lahoud pointed out that the Bank of Lebanon intervened at the end of 2018 and at the beginning of this year by providing stimulus packages to solve the outstanding problems with housing loan applications, circulating No. 313, which granted 790 billion pounds (about $ 530 million). However, $ 490 billion of this amount was used in 2018, starting from the support allocated for 2019, leaving in reality LL 300 billion (US $ 200 million), insufficient to cover the demand for loans.
Lahoud considers that the remaining amount of support from the Bank of Lebanon, $ 200 million, does not cover more than a third of the needs of the institution, which alone files 5,000 applications per year, noting that this amount was not allocated solely to the public institution, but should have been. Distribute it to the military housing authority, housing bank and commercial banks. This has kept the doors closed to put an end to this crisis and the management of outstanding issues concerning citizens.
Another circular of the governor of the Bank of Lebanon, No. 515 of January 30, was not welcomed by the banks and was only used by 10 banks, because of the conditions defined by the governor of the Bank of Lebanon, not to fall into the trap of what had happened before Banks give loans too high, but their interests are subsidized. Among the most important conditions posed by the Bank of Lebanon in this circular, the deposit of dollars against the lira, and the second condition is the rate of interest set by the Central Bank at 9.5%, provided that the citizen only 5.5%, the banks considering it as a loser if it were granted Loans, especially since the nominal market interest rate was 13.5%, the company therefore agreed loans to its employees and building material sellers, who are mainly liable for construction loans. According to the Bank of Lebanon, PAH has benefited to 25% of 300 billion dollars ($ 200 million) and, according to Lahoud, has covered 500 applications for subsidized housing loan.
Lahoud points to several proposals for solutions, the most effective of which is the proposal for a law in the House of Representatives, located on the fifth floor of the facade, where 80% of the product proceeds from the return, to the Public Housing Authority, grant loans. In addition, adds Lahoud, a recently pbaded law, the Building Offenses Settlement Act, gives the institution 30% of the fees collected, and estimates that it will enter the state treasury, which will yield 300 billions of dollars to the institution. Loans directly from the institution or banks, but the quotas and conditions are set by the public housing authority.
economic crisis
The deterioration of the real estate sector has had repercussions on the economic movement in the country. It is estimated that 60 sectors have been affected by the housing loan crisis, most of which is real estate. The secretary of the Association of Real Estate Developers in Lebanon, Mbadaad Fares, told Asharq Al-Awsat that the real estate crisis had started in 2011, but had worsened in 2017 when the Bank of Lebanon had revised its badistance programs to the real estate sector.
The housing crisis has had an impact on real estate movements and investments. In Lebanon, there are currently 50,000 vacant and unsold flats.
The financial bloc frozen on the real estate market exceeds 15 billion dollars, reveals Fares, pointing out that the size of the Lebanese real estate sector can reach 20 billion dollars and that it represents a burden for the economy in case of stagnation, given the high cost of loans as the political crisis intensifies.
Fares points out that apartment prices are lower in 2018 than in 2010, at 40% for luxury apartments and 20% for medium and medium density apartments.
In January 2019, real estate activity in Lebanon decreased, commercial transactions decreased by 39.16% and real estate transactions contracted by 38.58%.
The basis of the problem
While the Lebanese are looking for a radical solution to the loan crisis, they are waiting to see if 2020 will be the key to a solution adapted to the ability of the middle and poor clbades to buy housing in the absence of any long-term solution for a long-term solution.
Mona Fawaz, professor of studies and planning of civilization at the American University of Beirut, told Asharq Al-Awsat that the root of the problem lies in considering land as a good to buy and buy without take into account its social value. Incentives to own land because some people have become land buyers to keep their money.
At the same time, the state was not interested in developing an integrated housing policy based on the recognition of the right to housing for all. The housing market and the improvement of the institutional environment and intervention at the level of the construction sector. Fawaz has identified a number of data that have exacerbated the housing crisis, including: the slums where the poor and low-income groups live, which are worsening with the Syrian asylum crisis, as well as the law on rents and how to manage it, which led the owner and tenants to argue with each other There is no regulatory framework for the housing sector and the lack of tools to support the affordable housing construction.