The cabinet on Tuesday decided to lower the monthly rent of Hiya flats for seven years to fulfill President Dr. Mohamed Muizzu's pledge to return an estimated MVR 200,000 each tenant spent on finishing their flats. With this decision, the monthly rent comes down to MVR 3984.21.
"Currently they have to pay MVR 5330 monthly for the next seven years as per the agreement. So now they have to pay MVR 3984.21 for those seven months. Hiya flat rent is coming down to MVR 3984 for the next seven years. With a change to the agreement, but no change to the duration, we are effectively deducting MVR 200,000 from each flat,” he told reporters after the cabinet meeting.
Seven-year period
There are 7,620 flats in the 16 towers of the Hiya flats. The initial rent was MVR 7,500 per month. But following complaints from tenants, former President Ibrahim Mohamed Solih's government decided in May to decrease the rent to MVR 5,300 for seven years. The change was introduced after extending the lease term from 25 to 27 years. As a result, despite lower monthly rent, the overall price of flats remains the same.
With the change, the rent of MVR 5,300 started in June. The seven-year concession expires in May 2030.
President Muizzu also announced lower rent for seven years. "We are effectively deducting MVR 200,000 from each flat without changing the duration,” he said. There is room to assume that this is the seven-year period introduced by the former government.
Accordingly, the concession given by Muizzu's government will run until May 2030 or 77 months. If calculated exactly seven years from the date of the decision, the concession will end in December 2030 which is 84 months.
Do tenants get the promised MVR 200,000?
In the second round of the presidential election, on September 13, then-PNC presidential candidate Muizzu promised to pay each tenant an average of MVR 200,000 as the cost of finishing the flats. That is a costly pledge worth MVR 1.34 billion for 7,620 flats.
The government's decision on Tuesday only includes the change in rent. Although the President said that MVR 200,000 would be deducted from each flat, the relief over seven years at a monthly rent of MVR 3984.21 does not amount to MVR 200,000. The amount is exactly MVR 110,526,36.
In simpler words, the change to monthly rent is MVR 3984.21. That is a relief of MVR 1315.79 each month. Or MVR 15,789.48 per year. And MVR 110,526.36 for seven years.
If the decision runs for 77 months, the total relief per flat is MVR 101,315.83.
The closest formula to fulfilling Muizzu's promise of MVR 200,000 within seven years is to include maintenance fees. This will give a monthly relief of MVR 2315.79 to each flat. The total relief amount for each flat over seven years will be MVR 194,526.26. However, as per the current rules, maintenance fees will still have to be paid.
In any of these cases, tenants do not get the relief of MVR 200,000 promised by President Muizzu.
