The council’s finance committee has recommended that a government-appointed committee, comprising the finance and social affairs ministries and the Real Estate Development Fund (REDF), study the proposal.
The Shoura Council recently discovered that there are “huge numbers” of citizens who have defaulted on their loans. “The current system does not waive repayment for borrowers, only deceased people. There are no other regulations or legal provision to relieve these defaulted borrowers from repayment,” a source said.
Another source said that if citizens can provide documents proving they are unemployed or do not have the income to pay back their loans, they should be exempt from doing so. “The committee will work with the Ministry of Social Affairs to exempt them from repayment,” he said.
Emad Al-Rashid, a property appraiser, said if the government writes off these loans it could have a positive impact on the housing market, with prices likely to stabilize.
Fahd bin Ali, a businessman and real estate expert, said the payment of these loans are not likely to dampen high prices in some neighborhoods.
The council is expected to discuss in its next session recommendations of its finance committee for the REDF to restructure the repayment of loan installments for citizens. In addition, it wants the REDF to provide 77,000 extra loans to citizens.
The REDF has granted more than 811,000 loans worth SR263 billion for 975,000 residential units since its establishment in 1974. These are 25-year, interest-free loans for citizens to build homes. The fund also extends investment loans for citizens to build offices and showrooms, which cover 50 percent of construction costs.