One of the big problems for locals building their own homes in Iraq and in the semi-autonomous region of Iraqi Kurdistan is the way the construction is financed. It’s usually a piece meal thing, meaning that when the families can afford to add, say, a door, or a roof, they do so. This means that it can take years to finish a house. It also means that the landscape is littered with hundreds of half-finished buildings.
To solve this problem, the government of Iraqi Kurdistan started to make home loans available to those needing them. In 2013, around IQD600 billion (around US$500 million) was set aside for loans. Some of this money went into agriculture, industry and tourism loans but most – IQD500 billion (or US$420 million) - was allocated for housing loans.
In 2012, an NGO called Extended Family that specialized in micro-loans for similar purposes reported how it worked: “The Kurdistan Regional Government has just announced that it will begin offering no interest home loans to qualifying families to renovate or build a new home. It will loan up to $17,000 to a single family who qualifies for the loan. The repayment time will be extended to 20 years in some cases. This will give the family ample time to work and repay the loan”.
The government of Iraqi Kurdistan made the system part of its ongoing manifesto. “The government will continue to offer loans and mortgages to those who need them in order to make it easier for them to get married, build houses or complete other projects,” it proclaims on its own website.
It sounded like a great system. However currently many of the locals building houses are worried: something seems to have gone wrong.
For many of those who applied for home loans, a year has gone by and they have yet to receive any of the money from the loan. After a series of protests, the government started to receive loan applications in October 2013. Some of them were processed. But nobody seems to have received a cent yet.
Ahlan Karim is one of these people: he wanted to submit his application in February of 2013 but he had to wait until October to be able to do so. In the meantime the house he is building still lacks doors and windows and he’s still living in expensive rental accommodation.
“I couldn’t go on building the house,” explains the 30-year-old from Sulaymaniyah. “In the past people would always say building a house makes you age. But I think I might die before this house is finished,” he jokes before adding more seriously: “I wouldn’t have bought this land and started this building if I had not been able to loan money from the government.”
Those building homes in the region’s cities can get a loan of up to IQD20 million (around uS$16,800) and those building in the region’s villages may apply for IQD25 million (around US$21,000). The loans are given out in two instalments with the first paid after the basic structure of the house is completed and the second paid after construction is completed. And those instalments are paid in monthly lots. No payments are made at all until local authorities have checked the house.
“The pay outs of the loans stops at the end of each fiscal year in order to finalize accounts,” said Dalir Tariq, a spokesperson for Iraqi Kurdistan’s Ministry of Finance. “No new pay outs can be made until the region’s budget for 2014 is finalized and approved by the Iraqi Kurdish Parliament.”
However the financial committee of the Change movement, or Gorran – an oppositional movement in Iraqi Kurdistan even though they currently have the second highest number of seats in the local Parliament – says suspending the loan pay outs is illegal. Local law says that even if the budget approval is delayed, loans for homes, marriages and small businesses should still be paid because if they are not, ordinary citizens may suffer.
There are also suspicions that local banks don’t have enough cash in reserve to pay out on the loans.
Kurdish MP and economist Izzat Saber suggests that because the amount allocated for loans was increased in 2013, there has been increased demand for them. He also said he thought the suspension of loan pay outs was most likely illegal and that there were also problems with how the loans were being distributed and paid out on.
“But MPs will try and find solutions to all these problems when we discuss the draft budget law for 2014,” Izzat told NIQASH.
Rumour has it that the government may well pass the job onto the private sector, an idea that Saber supports. Allegedly the local Ministry of Finance also thinks this is a workable option. “The issue needs to be discussed first though, and a special committee formed to look into it,” Ministry spokesperson Tariq said.
The property loans are just one part of the Iraqi Kurdish government’s plans to solve the housing problem in the region; it’s meant to provide homes for those who need them as well as aid in reconstruction of local villages.
At the same time the government is also building state housing and giving the apartments and units built out to those lower income families who need them. However this process also seems to be taking too long. More than 26,000 potential tenants have filled out forms to apply for state housing but, just like those who filled out applications for loans, many of them are still waiting.
“It is a detailed process,” the head of the statistics department in Sulaymaniyah, Mahmoud Othman, tells NIQASH. “The forms were distributed and they are being reviewed. As yet no dates have been set for when the apartments should be distributed. We can’t set a date for when this process will be finished – it requires a lot of work. When we finish the work we will announce it. But the process is still ongoing.”
There is one last hope for people like Karim, with his partially built house, though - and that is the upcoming federal election. Those who have applications waiting for review hope that if they complain now, that the politicians will listen – they think that the authorities may just move on this issue before the elections in order to gain favour with local voters.