By Alireza Ramezani, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.
Iranian authorities have announced initiatives to tax unfinished residential buildings in Tehran and vacant homes in major cities. The move appears aimed at helping to stimulate demand in the housing market, which has been in a deep recession since summer 2013. Another motive could be to increase tax revenue as the government is expected to face a budget deficit in the Iranian fiscal year running to March 20, 2017, given the weakness in oil prices.
On Feb. 2, the Tehran City Council gave the mayor approval to tax builders who delay finishing construction projects in the metropolis. The so-called suspension tax is expected to free part of the 100 trillion rials ($3.33 billion) in resources tied up in 400,000 construction projects that are underway across the country, according to leading Iranian economic daily Donya-e Eqtesad. The paper, however, has not clarified how many of these unfinished projects are located in Tehran.
Tehran municipality will be allowed as of the next Iranian fiscal year, which begins March 20, to charge speculators up to 1 million rials ($33) per square meter for each month they delay finishing construction projects. The move, which is expected to increase the municipality’s revenue in the coming Iranian year, is seen as an effective way to reduce speculative activity in the housing market. However, some market players say the measure comes too late.
A real estate agent in the Iranian capital who spoke on condition of anonymity told Al-Monitor that the Tehran City Council’s move could have been made far earlier, when the property market slipped into recession more than two years ago. “With the sanctions having been lifted now, speculators will automatically accelerate their activity to free their blocked capital,” the broker told Al-Monitor.