Yet another policy reversal puts affordable housing out of reach for Malé residents

The keys to the flats were all but assured.

In October, nearly four years after they were found eligible for an affordable housing scheme in Malé, some 266 families drew lots to choose their flats in two newly built condominiums. After weathering years of uncertainty when a police mutiny forced out the government that had introduced the policy, the soon to be homeowners were relieved and excited.

“I am so happy, I want to move in as soon as possible,” a 47-year-old man who works in the government told the Maldives Independent.

It did not take long for the mood to sour.

The flat-winners were told Thursday that they must pay MVR2million (US$130,000) upfront or obtain home loans, for which banks are asking for a down payment of at least MVR400,000 (US$25,940), a price they say they cannot afford.

“This is not social housing,” said one man who spoke on the condition of anonymity. “This is for the rich. Most of us are not even eligible for the loan they are asking us to take.”

The 280 flats were promised by former President Mohamed Nasheed’s administration to land-owning residents of the capital city who could not afford construction costs or owned plots that were too small, and to landless residents. The former were to give up their plots to the government.

Some 266 families were selected to move in to the 190 flats at Arabiyya grounds and the 90 at Gaakoshi grounds by 2018, the end of Nasheed’s term.

Construction was delayed after Nasheed’s ouster when his successor sought to renegotiate the terms of the deal with Apex Realty, a subsidiary of India’s Tata. But Housing Minister Dr Mohamed Muizz, who has retained his cabinet post, assured eligible applicants they would receive flats and said they would only have to pay MVR9750 (US$632) per month for 25 years with an initial down payment of three month’s rent.

Construction resumed in 2014; nearly a year after President Abdulla Yameen took office. The flats were painted a light pink, the colour of the ruling Progressive Party of the Maldives.

Then in March, the government scrapped the monthly-instalment plan and declared that successful applicants will have to bear its total cost MVR2million within five years. Failure to pay the amount could lead to loss of the flat.

Muizz blamed the policy reversal on Apex Realty, saying it was demanding MVR277million (US$18million) upfront before it handed over the completed housing units.

At the time, former Housing Minister Mohamed Aslam said the price of a Tata flat, as the units are known, was MVR1.1million and not MVR2million. “What rubbish is Muizz talking?” he said in a series of Twitter posts, urging Muizz to a public debate.

Following a public outcry, the government relented and said it had reached an agreement on a payment plan with the state-owned Housing Development Corporation.

With all the uncertainty, none of the eligible families have been willing to speak on the record because they say they are afraid the government take away their flat. Even on the day of the lottery, no one wanted to have their names published, even to express their relief.

Then on Thursday, the HDC sent a letter asking flat-winners to take out loans from the Bank of Maldives, the Maldives Islamic Bank and the Housing Development Finance Corporation to make the MVR2million payment.

Both BML and HDFC require loan applicants to pay 20percent of the loan or MVR400,000 as equity. The BML loan comes with a repayment period of 20 years and an interest rate of ten percent, while HDFC offers an interest rate of 11.5percent on a repayment period of 20 years.

MIB meanwhile requires applicants to pay 30percent of the loan amount or MVR600,000 as a down payment; its interest rates are not published.

More than 90percent of the flat winners would not be able to afford the flats; government figures from 2010 show that more than half of Malé’s households earn less than MVR20,000 (US$1297) per month. One man who spoke to the Maldives Independent said the price is out of reach even if they were to collaterise their pensions, a policy introduced by the Yameen administration.

Even if families were able to obtain loans, they would have paid double the price at the end of the repayment period because of the high interest rates.

“MVR2million is a good rate for a flat in Male, but when its MVR4million that’s just exorbitant,” one flat-winner said: “This is what happens when policy changes. This was an MDP government policy. And now these people have no idea what to do.”

Frustrated, some 35 people staged a protest in front of Gaakoshi on Monday. One woman carried a toddler on one arm and a sign that said: “How can we pay MVR400,00?”

They said Muizz and HDC’s Managing Director Mohamed Simon have refused their requests for an appointment to discuss their problems.

“Nobody is helping us. No one cares. We were desperate and we have to do something,” said a father who lives with five of his family members in a one-room apartment.

Within minutes, they were dispersed by dozens of police officers, as the Yameen administration has banned protests in the capital.

Weary, the group left the building Muizz had said they would move into by August.

“How can they do this to people? After informing us of exactly which flat we are supposed to move into. We know which floor it is located on and which number,” a 40-year-old woman who works in the tourism sector said.

Additional reporting by Mohamed Junaid