الاثنينية ::المكتبة

مكتبة الاثنينية

HOUSING FINANCE:

Generally, housing finance in the Kingdom is provided by:

- The Real Estate Development Fund.

- The public sector represented by the Ministry of Housing and Public Works.

- National banks.

- The private sector either with loans from the Real Estate Development Fund or without.

- Joint-stock companies with funds from both the government and individuals.

- Institutions which provide housing for their employees.

The two factors, which have leading roles in providing the poor and low-income group and the public at large with development homes, are:

I. THE FREE LAND PLOT PROGRAMME:

whereby the Government, through municipalities, gave free land plots to needy people and low-income groups to build their homes.

In the last 15 years, 1,078,740 plots, ranging from 400 to 900 square meters each, were given away to eligible people in different Saudi cities. Due to this factor and with the help of the second factor (Real Estate Development Fund), new suburbs sprang around the Saudi cities, with comprehensive services and infrastructure. They contributed to the expansion of the Saudi cities, keeping in mind that most of the lands surrounding them are desert.

II. REAL ESTATE DEVELOPMENT FUND (REDF):

It was established in 1974 to enable individuals to build their houses and the private sector to invest in housing. It is also allowed to enter into agreements with the municipalities to develop new residential areas, and to assist Government institutions in setting up housing project for their employees. In the last 18 years, the REDF granted 378,757 loans to individuals totaling SR. 100 billion (US$26.7 billion). Each individual loan totals SR.300,000 (US$80,000) repayable in 25 years with no interest. Moreover, 20% of this loan is deducted, where the beneficiary should repay an annual installment of SR. 12,000, but he “instead” repays SR.9,600.

In this respect, I would like to give an example of the due attention given by the Saudi government to this humanitarian issue, that is, through the REDF, despite the substantial decline in its revenues due to the oil's low prices and the high cost of liberating Kuwait, gave away 22,000 loans totaling about SR.6 billion (US$1.6 billion) during the last fiscal year.

During the same period 2,554 loans totaling SR.5,228,44,000 (US$1,394,278,400) were lent to businessmen to build apartment buildings and villa compounds. These loans are interest-free and repayable in ten years, but do not, however, get the deduction privilege.

The Government through the Ministry of Housing and Public Works, has built over 25,000 housing units in the cities of Dammam, Jeddah, Riyadh, Al-Khoba, Makkah, Madinah, Buraidah, Al-Qahtif and Al-Hassa. They were distributed to low-income people by the REDF through a financing arrangement as the loans it gives. We notice that number of housing units built by the Ministry of Housing and Public Works is relatively small compared to units financed through the REDF. This because people want to design their own homes, select the sites where they prefer to live, may be near relatives and friends. That is why we find that the design and architecture of homes vary considerably from one city district to another. On the other hand, housing projects set up by the Ministry provided standardized housing units.