Minister of Housing, Land and Urban Development Dr. Abdulla Muththalib has stated that applications for the "Help to Build" and "Help to Buy" schemes, which provide government financial assistance to pay down payments or equity required for housing construction and purchase loans issued by banks, will officially open next month.
Introduced under the National Home-ownership Program run by the Housing Ministry, these are two schemes formulated to arrange equity, which is identified as the biggest obstacle facing families in securing own housing.
To implement this project, the government signed agreements last week with Bank of Maldives (BML), Maldives Islamic Bank (MIB), Housing Development Finance Corporation (HDFC), and Maldives Finance Leasing Company (MFLC).
In a post published on LinkedIn last night, the Minister stated that for many families, the biggest difficulty in owning a home is not the monthly installment payments.
Instead, the Minister stated that the major obstacle for many families in obtaining loans is paying the large equity amount required upfront by banks at once.
Reality shown by studies: Savings difficulty
The Minister also shared some details revealed by the "Maldives Affordable Housing Reform Study" compiled by the Affordable Housing Institute with assistance from the World Bank:
- More than half of the households of families participating in the study have no saved money at all.
- Fewer than 10 percent of surveyed families are able to save more than MVR 3,000 per month.
- Even for a family saving MVR 3,000 per month, it takes approximately 10 years to accumulate the 20 percent equity (MVR 400,000) required for a 2 million Rufiyaa apartment.
Even when looking at middle-income families in Malé, the study noted a shortage of approximately MVR 300,000 in the equity required to purchase an average two-bedroom apartment.
Both schemes introduced by the government are free grant schemes provided directly to cover equity, which do not need to be repaid as a loan.
1. Help to Build
This scheme is specifically dedicated to individuals who own private land but lack adequate housing and wish to take loans to construct homes.
- Grant amount: To arrange the 20 percent equity required for a 1 million Rufiyaa loan, the government will grant a maximum of MVR 200,000 per person.
- Multi-owner construction: If multiple heirs construct together on a single land parcel in Malé, each eligible person will receive MVR 200,000, up to a total grant limit of MVR 1 million for a single land parcel.
- Scope: In the first phase, this scheme will be run in Malé and inhabited islands of the atolls. (Hulhumalé, Vilimalé, Gulhifalhu, and Giraavarufalhu are not included in the first phase).
- The land intended for construction must be the private property of the applicant. Permission to use a specific portion of the building for commercial purposes will also be granted.
2. Help to Buy
This scheme is dedicated to first-time home-buyers.
- Grant amount: The government will grant up to MVR 250,000 as free assistance for MVR 1.5 million units built by private developers under affordable housing projects.
- Disbursement: This assistance will be deposited directly to the developer through the loan-issuing financial institution. This amount will be deducted from the purchase price. As a result, the out-of-pocket amount required for a 20 percent deposit will decrease from MVR 300,000 to MVR 50,000.
- In upcoming phases, plans are in place to expand this assistance to individuals purchasing flats for the first time in the Malé area.
Relief to state budget and protective measures
Muththalib noted that with the cost the state incurs to build one house, equity to construct homes can be provided to approximately five families under this model.
In addition, the Minister stated that providing this assistance to families capable of taking bank loans frees up space to allocate government-built social housing flats directly to the most vulnerable families.
To prevent misuse of the scheme, robust conditions have been set.
Accordingly, if a home built or purchased under this assistance is sold within 20 years, the entire free grant provided by the government must be repaid back to the state.
Highlighting the importance of paying loan installments instead of rent, the Minister stated that no matter how low the rent paid is, it does not create personal ownership. However, he stated that once loan installments are fully paid off, it becomes the family's own property.
Muththalib stated that the ministry will publish detailed guidelines very soon before opening for form submissions next month.
Therefore, the Minister urged applicants to prepare by checking land documents, speaking with banks to determine eligible loan amounts, and staying ready.
