Interest-free housing sector is being legalized

Eyup Akbal, the board chairman of FuzulEv stated that companies operating under the ‘interest-freee housing sector’ will be regulated, and that the sector continues to grow rapidly and increase it’s sales just like ‘interest-free banking’.

Mentioning that the number of companies in the interest-free housing sector has increased to 35, Akbal explained that the legal infrastructure of the sector and automobile finance system has not been existed so far.

Akbal noted that the Ministry of Treasury and Finance and Banking Regulation and Supervision Agency (BRSA) have started a study on the interest-free housing sector. He said:

‘’ The government pays attention to this issue. We think the legislation will be ready by the end of 2020. The system and participants will be secured with the legal regulation of the government. “

Akbal emphasized that especially those who are sensitive to interest or do not want to bear the additional interest cost in bank loans pay attention to the interest-free financing system based on savings for housing and automobile purchases; and that the share of interest-free housing sector in total house sales in Turkey approached to 15 percent. He said:

‘’ We anticipate that this share will double with the positive effect of the legal guarantee of the system thanks to the regulation to be made until the end of the year. “

” Lack of government guarantee is a big risk. “

Stating that the number of companies in the interest-free housing sector and the recent sale increase have brought some risks, Eyup Akbal said:

‘’The fact that there is no capital requirement for companies operating in interest-free housing sector and that the payments made by the participants to these companies are not under the guarantee of the state pose important risks regarding the system.

We estimate the participant number of the interest-free housing sector is nearly 250 thousand. As Fuzulev, we are conducting negotiations with Ankara on behalf of the interest-free housing sector for legal regulation. We share with the public authorities that the fact that there has been no problem in the system so far does not mean that the system does not contain any risk.

This is actually an economic model. However, the attention of the government was not drawn to this point because there were no serious figures before, and there was no need for any legal regulation. However, as of the point we have reached, many companies have started to appear in the sector in the last 4-5 years. Now it started to attract the attention of the government. Certainly, a regulation must come to this system. “

‘’We predict that there will be a serious capital requirement.’’

Referring to the messages they received from the interviews, Akbal anticipated that a very serious amount of money will be requested from the companies when the regulation comes.  Reminding that a very serious capital requirement is required for the banking license, Akbal said:

‘’ There will be a similar condition for companies in our sector too. Of course, you need to have both capital adequacy and not to have any commercial negativity experience in the past in order to establish a bank. When all these elements are added together, we will face a serious regulation. As the transactions will be covered by the warranty with the regulation, the demand will increase significantly.’’

Akbal, noting that in the interest-free financing system, financing can be provided for the entire housing price, and that this situation makes the system attractive especially for those with low income and no savings. He said

‘’ The total amount paid for the residence increase significantly with the interest burden brought by the bank loan; the cost can double. In the interest-free finance system based on savings, money does not have any cost. Since the system does not include any additional financial burden, the citizen can easily own their home and car. It just takes a little time.’’

source: AA / translated by Melisa Karayusufoglu

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