A Presidential decree has established a Mortgage Finance Supervisory Authority (MFSA), a step that should help ease access to finance and increase demand in the real estate sector.
 
The MFSA will operate as the regulator of the mortgage finance sector in Syria and will have the authority to issue laws that will permit the licensing of mortgage finance houses.
 
Law 39/2009, which was passed on December 30, establishes a 13-member Board of Directors presided by the Minister of Finance. The other members will include 3 experts from the private sector and officials from state-affiliated institutions as well as the heads of the Damascus Securities Exchange, the Real Estate Development and Investment Commission (REDIC)and the Insurance Supervisory Commission.
 
The MFSA will be responsible for issuing all mortgage finance-related legislations and regulations including standards contracts, licensing instructions to mortgage companies and funds, as well as the establishment of a national mortgage institution.
 
The law sets a number of penalty fees on mortgage firms that do not abide by the regulations in place.
 
The real estate sector is a prime destination of investment by both households and companies in Syria. The sector has also managed to attract significant inflows from Syrian expatriates and from investors from the Gulf region.
 
However, lending by banks has remained very limited because of the cumbersome regulatory and legislative framework. Foreclosure processes, for instance, are extremely long and are made difficult because of the different land registries.
 
Low average incomes, high interest rates as well as the high prices of housing are additional factors behind the limited volumes of credit facilities currently directed at housing and real estate by the local banking sector.
 
The government, however, has been trying to better regulate the sector. This has included the establishment of a regulatory authority for investment in real estate as well as several programmes with international institutions to organise informal housing, which is estimated to represent some 38 percent of the country’s total housing units.
 
“We expect the MFSA to boost demand in real estate in the same way we expect the law that established the Real Estate Development and Investment Commission to boost supply,” Mohammad Hussein, the Minister of Finance, said.
 
REDIC was established in 2008 to regulate investment in the real estate sector. In practice, however, it is just beginning to operate and has not yet had any impact.