The Egyptian government has finally taken serious steps to provide an easy access to home loans to about 16 million Egyptians who don’t have adequate housing. The government has decided to give these home loans to low income groups on simple conditions so they can have their own houses and can enjoy good living conditions. The government is also impelling developers of private sector to make low cost residential colonies and help government in providing common people with good living conditions.
In order to start working on this plan, the Egyptian Financial Supervisory Authority (EFSA) presented its recommendations regarding the amendments in the Mortgage Finance Law 2001 to the Minister of Investment, Osama Saleh. The mortgage financing companies comes under EFSA which deals with the regulation of all the non-banking financial activities in the country.
According to the statement made by EFSA, the authority has proposed the minister of investment to increase the mortgage-to-income ratio limit for low income groups as it will allow more people to get benefits from State’s Mortgage Finance Fund.
In January, the EFSA made an announcement that it has signed an agreement with the New Urban communities for ensuring the rights of the Mortgage Finance companies. Speaking of the agreement, the Chairman of EFSA said that development of Egypt real estate, property sector was always one of the top priorities of the authority.
According to the local reports, these recommendations proposed by the Egyptian Financial Supervisory Authority (EFSA) regarding the amendments in Mortgage Finance Law are now under the review of the Cabinet.
The Egyptian government is planning to limit the restrictions on Mortgage and is also making efforts to provide low cost housing to Egyptian People. By the end of January, the Minister for Housing, Utilities and Urban Communities or Development, Ibrahim Mahlab said that the government has planned to provide about 50,000 units to people by the mid-year and a total of about 90,000 units in the coming 14 months. These housing units will be presented as a part of state-funded construction program. He further said that government is encouraging private sector funding for this program but a lot has yet to be done for this.
The private sector participation will help government in dealing with the shortage of low-income housing and it will also be easy for the government to complete this program in a short period of time. The government has also had a social housing program which was started decade before and is still not completed. The program is finding problems to meet the needs of Egyptian people and there is a shortfall of about 1 million to 3 million units.
The private sector developers are more focused about high end developments in the sub-urban areas like outskirts of Cairo that offer more reliable and better returns to them.
There is an imbalance in Egypt’s housing mix in which there is shortage at the low market end and surplus of high market properties. According to an official survey in 2013, it was claimed that about 30% of the existing housing properties are unused and empty, most of which serve as holiday or second properties. Another report from Egyptian Centre for Housing Rights claimed that about 6 million of the housing units in country are unused of which majority are located in the region of Cairo.
This shortage of housing units to the low-income groups has given rise to illegal construction in the country. In February, it was reported by the ministry of housing, Utilities and Urban Communities that in the last three years about 500,000 housing units have been constructed without government’s permission.
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