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50 Fahidhiriulhun flats for people who purchased Arabiyya and Gakoshi flats at high interest rates

Lamya Abdulla
24 September 2023, MVT 13:00
(FILE) Gaakoshi flats, captured on April 18, 2018: current administration said they could not find a way to restructure current payment agreements made with banks regarding the loans taken to purchase flats from Gaakoshi and Arabiyya -- Photo: Mihaaru
Lamya Abdulla
24 September 2023, MVT 13:00

The government has decided to allocate 50 flats currently under development in Hulhumalé to provide relief to families who applied for the social housing project initiated by the government in 2010 and purchased Arabiyya and Gaakoshi flats by obtaining loans at a high interest rate.

Minister of State for National Planning, Housing, and Infrastructure and Chairman of the Housing and Land Committee, Akram Kamaludeen told Mihaaru News that while the government was trying to find a solution for the families who were forced to apply for social housing by taking loans at high interest, they were unable to provide a solution within the bank.

Therefore, those families were given a document stating that they would be given flats through a scheme being implemented by the government at the earliest, he said.

"They will have an official government letter [letter] that each of them will be given flats from those that will be built first in the housing scheme run by this government. Therefore, the President's decision is to allot flats in Hulhumalé as part of the current housing project," Akram said.

Forty-seven families were forced to take commercial loans in order to purchase flats developed in Gaakoshi and the land where Arabiyyaa School was previously located.

When the Maldivian Democratic Party's (MDP) government launched the Veshifahi project in 2010, they guaranteed that the flats would be allocated at a lower cost with a long-term payment plan. Families were assured that they would make an initial down payment of MVR 28,000 for the flats, and the remaining amount would be paid over a 20-year period, amounting to approximately MVR 7,000 per month.

However, during the administration of former President Abdulla Yameen, a decision was made to require a one-time payment of MVR 2 million for the flats. This decision was communicated to the families in 2016, deviating from the usual practice of social housing schemes.

Worried about having to pay MVR 2 million in one go, the flats were transferred to Urbanco, then known as Housing Development Corporation (HDC), in 2017. They provided the tenets with an alternate payment method, which is to pay MVR 33,000 monthly for five years in order to complete the MVR 2 million period. Families that were unable to meet these demands were to sell their apartments.

Therefore commercial loans were withdrawn at 9 to 11 percent interest rates, which is double the usual amount, to be paid back in 15 to 20 years.

To ease this, the families had submitted a proposal to the government to fix the price at which they had decided to pay for the flats when the Veshifahi project was opened. They also requested for the government to take over the loans taken by these families. The other option is to restructure the loans they have taken and make repayment easier. They had also requested the government to ensure that they get a three-room apartment allotted to them under whichever social housing scheme that would be completed at the earliest.

Akram also said that the previous government had offered loans to different people at varying interest rates, while the current government had discussed reducing the interest rate by 11 percent through negotiations with banks, but no solution had been reached. Given these circumstances, the government decided to allocate an additional flat through the social housing scheme as the most viable relief option.

The then Housing Minister, Dr. Mohamed Muizzu, who is now contesting on People’s National Party (PNC) presidential ticket, expressed concerns about the high price of the flats allocated to Tata Companies in India for social housing. He pledged to find a solution to ease the burden on people who had taken out loans to purchase these flats.

However, when he was minister, Dr. Muizzu said that the price was not high compared to what the government had to pay. President Ibrahim Mohamed Solih criticised Dr. Muizzu's comments, questioning whether such actions were not carried out during his tenure as housing minister.

In response, Akram alleged that the cost of the flats had increased after former President Mohamed Nasheed's government, and Dr. Muizzu took charge of the ministry and resumed the project after a long delay.

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