Changing the Evaluated Prices of Homes in Social Housing Projects
In January, the General Housing Establishment (GHE) issued newly evaluated housing values within social housing projects that are ready to be allocated in 2022. According to the GHE, the new values would help in achieving the social goals of the projects.
In a statement, the GHE said that a portion of the costs for infrastructure meant to serve social housing projects will not be collected from housing applicants within those projects, but rather from the accompanying investment plots, which are parcels of land usually allocated for commercial use. The GHE added that it had also unified the prices of some social housing projects and reduced the percentage of profits from 15 to 10 percent.
According to the GHE, the average value per square metre of a building that is 80 percent constructed and ready to use in a youth and savings housing project is SYP 596,385. The estimated value of one square metre in labour housing is SYP 480,000, with the exception of labour housing in Hama governorate, which is SYP 810,000 because it is fully clad and ready to use. The GHE said that its method for calculating the values of housing units in such projects is based on the total costs of each project in accordance with Legislative Decree No. 26 of 2015, which regulates the work of the GHE.
It is worth noting that in a statement, the GHE used the term “evaluated prices of housing” rather than the previously used “appraised values of housing.” However, it is difficult to determine the actual difference between the two. Law No. 8 of 2012, which concerns the profession of real estate experts and the conditions for practicing the profession, real estate evaluations means estimating the value of properties based on a comparison with market prices, while an appraisal sets the value of a property in accordance with the intention of the appraisal process and in compliance with certain criteria.
Changing these values, as the GHE has done, could directly impact the overall subscription, allocation, and handover processes for social housing projects. The GHE mandates that subscription for such housing only occurs after a prospective applicant makes a cash payment of no less than 10 percent the estimated value of a given housing unit. Before allocation of the housing unit they must pay 30 percent and pay off the remaining value in instalments over the next 25 years.
For example, the evaluated price of a 100-square-metre apartment in a youth housing project is now around SYP 60 million (in 2004, at the time of subscription, the value of that same apartment would have only been around SYP 1 million). In light of the newly announced values, the applicant must now pay SYP 18 million (30 percent of the new evaluated price of the apartment) in order to complete the allocation process then pay the remaining value over the next 25 years in instalments of more than SYP 140,000 per month before accounting for interest. Meanwhile, the current average monthly salary for an employee in Syria is around just SYP 150,000. This alone contradicts the conditions for housing subscription – that is, that the payment instalments may not exceed 30 percent of an applicant’s monthly income.
It is also worth noting that the GHE called on applicants in November 2021 to pay 50 percent of the value of their plots or equity shares within three months before being entitled to a housing allotment. This demand violates the principle that allocation occurs after the applicant pays 30 percent of the evaluated price of their desired housing unit.