The details of the new social housing program approved by the Cabinet have been released by Minister of Housing, Utilities, and Urban Communities Mostafa Madbouly, reported Invest Gate.
“The Egyptian Cabinet approved three new terms within the social housing program after the approval of the Social Housing Fund Management Council, in response to the needs of the large segment of the citizens wishing to obtain a safe residence for their families,” said Madbouly.
The first added term is to offer 6,000 two- and three-bedroom units within the social housing projects up for lease for citizens with monthly income of less than EGP 1,500. The second term is for earners of family monthly income of up to EGP 5,000, or EGP 4,000 for a bachelor, allowing them access to units already built or under construction, Madbouly added.
The final term approved by the Cabinet is the provision of up to 20,000 housing units for the trade unions within the social housing project.
Each term includes several stipulations. Units offered for lease are available to the individuals or families with incomes below EGP 1,500 per month, and the Directorates of Social Solidarity will prioritise applicants by conducting background checks that will be updated mid-term.
Applicants are not allowed to sublet the unit, and are only permitted to employ the units for personal use. Applicants or their spouses should not have previously been beneficiaries of subsidized housing or a cooperative loan, and the unit to be rented should be in the same city as the applicant’s employer. The maximum limit of the rental period of any residential unit is a non-renewable seven-year period, unless otherwise stipulated in the agreement between parties.
Priority shall be given to residents of informal settlements or unsafe slums that are scheduled to be developed over the next two years, followed by single female breadwinners, people with special needs, large families, families with children, married couples, and bachelors, in the event of a large applicant turnout to the program.
The applicant will sign a written declaration not to exploit the unit or use them in any kind of actions and transactions during the term of the lease, to pay the monthly maintenance, and rent. If the tenant breaches the agreement, the unit will be withdrawn from the citizen and returned to the Social Housing Fund. The citizen will have to pay the appropriate compensation, which is equivalent to the subsidies provided, ranging from EGP 27,300 up to EGP 66,000 depending on the number of units.
Regarding the payment system, the Minister of Housing said: “The citizen should pay upfront the electricity, water and gas bills amounting to EGP 3,000, as well as the value of monthly consumption, in addition to the value of the rent for three months in advance, which amounts to EGP 3,900 for the two-bedrooms units, and EGP 4,250 for the three-bedrooms units.”
The subsidized monthly rent is EGP 300, including EGP 25 for the maintenance of the two-bedrooms units, and it increases by 7% per annum. The rental market value for the unit ranges between EGP 600 and 800 per month, depending on the location and the city. For the three bedroom units, the tenant shall pay EGP 410, including EGP 35 for the maintenance, where its market value ranges between EGP 800 and 1,200 per month.
The tenant has the right to apply for ownership of the leased unit during the term of the lease or a month before the expiration of the rental period. In that case, a lease contract can be set up if the applicant meets the terms and conditions of the mortgage fund and commits to using the unit for residential purposes over five years from the date of possession.
As for the second term of the program, Madbouly said: “The units are available for individuals with net incomes ranging from EGP 2,500 to 4,000 per month, and EGP 3,500 to 5,000 net per month for families. Applicants can benefit from the Central Bank of Egypt’s initiative to obtain a mortgage with an 8% declining interest rate over 20 years, and there is no cash support from the mortgage fund for that category. The maximum age of the applicant should be 55 years, and applicants should not have previoulsy purchased a social housing unit. The down-payment is 25% of the residential unit price to be paid in four quarterly installments.” Installments are determined according to the level of income, the customer’s credit history, and the Mortgage Finance Fund review.
With regard to the third term of the program, Madbouly pointed out that it provides housing units for the trade unions within the social housing project, in the range of 20,000 units as a first phase. The number of units offered will depend on the advance payments made and only offered in the case of availability of remaining units from previous announcements.
The conditions for the third term include the union’s announcement of unit availability internally with the conditions and documents required, the union’s receipt of the down-payments from the applicant, and the transfer of money and documents to the Housing and Development Bank. The bank will then review the data provided by the trade unions and perform an applicant background check to ensure the applicant’s eligibility for the units.