Winners of flats under the previous government’s Veshi Fahi Malé social housing programme have been told by the state-owned Housing Development Corporation to secure loans before a deadline of October 15.
The HDC’s announcement last Tuesday came after complaints about delays in introducing a new affordable housing loan scheme devised by the central bank to help make payments for flats built in Malé by a subsidiary of India’s Tata Group.
The flat winners were previously told to either pay MVR2 million (US$130,000) upfront or obtain home loans with a down payment of at least MVR400,000 (US$25,940), a price out of reach for middle or low-income families.
After months of uncertainty for the 288 flat winners – several of whom were deemed ineligible for commercial bank loans – the central bank in late August enacted regulations mandating banks and financial institutions to join its new loan scheme and allocate at least 10 percent of income for low-interest housing loans.
According to the regulations, the down payment can be guaranteed either through the Maldives Retirement Pension Scheme or a special fund set up by the Maldives Monetary Authority. The scheme also aims to facilitate modest monthly payments based on the percentage of equity invested to secure the bank loan.
Some flat winners, however, are unhappy with what they call “a forced entry into a ruinous loan scheme”.
One woman who wished to remain anonymous told the Maldives Independent: “We have been kept in the dark for days and now we are forced to go for a bank loan. This can bring no good to us.”
She added: “We have to mortgage our plot of land in Malé to get the loan and the bank will definitely take over the land plus the flat if we are unable to pay back the loan. Where shall we find shelter then?”
Others expressed distrust towards the government over “unexplained, sudden changes in policies”.
“During [former President Mohamed] Nasheed’s government we were told to pay monthly MVR9,000 [US$684]. That was an understandable amount for ordinary people like us. But now this [President Abdulla] Yameen’s government is telling us to pay a higher rent. How are we to know if they will not raise the rents again?” another woman who wished to remain anonymous asked.
Flat winners were initially told to pay a monthly rent of MVR9,725, but the housing ministry in March 2016 raised the amount to MVR33,000 (US$2,140).
Under the new scheme, a down payment of 20 percent (MVR400,000) brings down the rent to MVR14,000 and a down payment of 10 percent (MVR200,000) and five percent (MVR100,000) lowers the rent to MVR 16,000 and MVR17,000 respectively.
According to the Housing Development Corporation, only 53 apartments from the two TATA condominiums in the capital have been handed over and some 235 apartments remain on hold.
The HDC instructed the flat winners last week to submit a general information form by September 12, after which the company would advise eligible applicants about the most appropriate bank or financial institution to apply for the loan.
The company assured ineligible applicants that “the government will make arrangements to secure affordable housing to those parties under a special priority list from the suburb of Hulhumalé.” However, the disqualified applicants will be required to give up their flats.
Applicants under category A of the Veshi Fahi programme were promised flats in exchange for relinquishing small plots in the capital.
A third flat winner who wished to remain anonymous told the Maldives Independent that several have managed to secure loans through the Maldives Islamic Bank.
“As far as I know, some 40 individuals have gone for the MIB loans because it is expensive and a difficult process at the Bank of Maldives. My husband and I pay MVR 22,400 [US$1,454) per month, MVR 21,200 for the MIB loan and MVR1,200 for HDC,” she said.
The MMA’s former governor Dr Azeema Adam told the press in July about negotiations with the MIB to “to restructure the loans issued for flat winners”.
She also noted plans to set up a special fund at the MMA to provide guarantees for down payments.
According to the MMA, a maximum MVR2.2 million will be issued for the loans, which must be paid back in 25 years.
The interest rates will be based on the down payment.
“If 20 percent is paid as loan down payment, the interest rate is five percent. If the down payment is 10 percent, the interest rate is 5.5 percent and if down payment is five percent, the interest rate is at six percent,” the central bank explained in a statement.
Azeema had also assured the TATA flat winners that banks would begin processing applications in August. But many were turned away when they sought information from the MMA, housing ministry, and the HDC last month.
“Officials at the MMA and the HDC were taken by surprise when we questioned them about the loan scheme,” one flat winner told the Maldives Independent.
Others criticised the government for “brushing off” their concerns.
“When we went to the president’s office, they said we should go to the housing ministry. The housing ministry sends us to the HDC and they have no idea about what is happening. So we do not know under whose mandate these flats come under,” one woman said.
“This is not a social housing scheme. The government does not want to have any part in this. They make lots of nice talk on TV programmes and issue statements about convenient loan schemes.”
The MMA’s information officer stressed that the HDC has been entrusted with carrying out all the procedures under the scheme. The official denied receiving any complaints from flat-winners.
Azeema also spoke about the importance of affordable housing loans during the Maldives Financial Expo in early July.
“The country’s economy can progress at a fast pace even without ownership of houses. But the people’s living standards can only improve, the people can only be empowered when everyone has their own homes,” she was quoted as saying by local media.
“The housing loans must be restructured to make sure that the person is able to pay it back from his own salary. The housing loans should not be made accessible only to the wealthy and those with higher incomes.”