Trend: Syrians are Increasingly Trading Eviction Notices and Other Property Rights
Damascus and its outskirts have recently witnessed a rise in trading of subscription ledgers for social and cooperative housing projects. Rising real estate prices are likely driving this real estate-adjacent market, most of which is centered around properties that have yet to be built, and are part of larger construction projects some of which may not be carried out in the foreseeable future.
The General Housing Establishment (GHE), affiliated with the Ministry of Works and Public Housing, supervises construction of social housing projects, while cooperative housing projects are carried out by housing cooperatives. In both cases, the subscription ledger contains information on the project and its owner, the sale and purchase of the property, and the installments already paid.
However, with the recent rise in real estate prices, a parallel market is thriving, perhaps due to the relatively low cost of subscription ledgers compared with normal real estate purchases. This parallel market is open to a wider array of Syrians who cannot afford to buy real estate in Damascus and its outskirts.
The prices of subscription ledgers are subject to several factors, including when the subscription was made, the volume of previous and remaining payments, the size and location of the apartments and the SYP exchange rate.
People are resorting to this alternative real estate market primarily to protect their savings as the value of the Syrian pound deteriorates, while using foreign currencies in the black market could lead to government prosecution.
Until 2014, Syrian law banned the circulation of real estate properties meant for subscribers to social and cooperative housing projects before the full price had been paid. Some laws even stipulated that the subscribed housing unit could not be sold until at least 15 years after it had been handed over to the original subscriber. However, Legislative Decree No. 36 of 2014 amended Cooperative Housing Law No. 99 of 2011, effectively breaking that rule for cooperative housing units and allowing them to be sold before or after receipt by the original subscriber, so long as the party who eventually takes ownership of the property continues making any remaining payments required of him. With each such reassignment procedure, or “exchange”, the housing cooperative collects a fee equal to one percent of the value of the housing unit, 80 percent of which then goes to the state treasury. The remaining 20 percent is distributed within the cooperative housing sector.
Meanwhile, Decree No. 37 of 2014, regarding the sale or allocation of social housing, permitted subscribers to relinquish housing units at any stage in the subscription process. The decree stipulated that the buyer must pay seven percent of the required housing payments upon the purchase of the housing unit.
At the same time, another parallel market has emerged for eviction notices and communal shares within the alternative housing projects set up as part of Decree No. 66 of 2012. The decree allows for the creation of two development zones within Damascus. As with the subscription ledger market, the selling of eviction notices and shares is permitted under the law.
Eviction notices are official warnings handed to owners of properties subject to demolition orders in the two Damascus development zones. These warnings are equivalent to receipts that allow their holders to register for alternative housing.
Also, under Decree No. 66, properties within the development zone constitute common property shared among those holding rights therein in shares equivalent to the estimated value of the property for each, and the in rem rights which they possess. The value of the plots is estimated based on the value of the properties on it. Ownership rights are distributed as equity shares in common among rights owners. This means that property owners get equity shares in the development zone.
Decree No. 66 of 2012 permits circulation of these shares. However, the decree also stipulated that any trading of the shares must take place within one year of the announcement of the shares’ final distribution schedules. Those schedules have not yet been released for Damascus’s two organisational zones. That means the shares are currently being traded before the release of the official schedules, i.e., in the black market.
According to information leaked by Damascus governorate employees, the prices of eviction notices are determined according to the calculated number of shares. That is, the value of a particular eviction notice is calculated according to the corresponding shares established for the demolished property. The warning is then sold and documented with a contract by the notary, provided that the shares are then legally assigned to the corresponding warning and the governorate announces their distribution schedules and values.