THERE is an urgent need for the authorities to expedite the much-needed mortgage law which has been in the pipeline for many years. The law will bring much needed price certainty to the market, which according to some, is being exploited by unscrupulous operators raising prices and making it unaffordable for many to own a home. The proposed law is part of a planned overhaul of the Kingdom's home finance market, regulating all parts of the industry: from registering mortgages to allowing judges to prosecute police officers who refuse to carry out eviction orders. The changes are aimed at easing the concerns of lenders discouraged by unclear regulation that could lead to lengthy court disputes. Regulations are important for borrowers because it is expected that the law will have provisions to clamp down on operators trying to inflate prices. It is essential that the public is protected. One need only look at real estate bubbles bursting elsewhere – Dubai being a case in point in the region – to see what the negative economic consequences can be of relatively unfettered and unrestrained growth in the sector. It is estimated that the Kingdom needs 1.5 million houses now, rising to 4.5 million in 2015. According to reports, Riyadh alone needs close to 50,000 housing units a year, costing a total of SR13 billion a year, over the next 10 years. These are staggering figures and are evidence that there is going to be a massive boom in construction in the coming years, accelerating current growth taking place across the Kingdom. Legislation will create some certainty for financial institutions, like banks and other lenders, who want to enter the market. These financial institutions want to make sure they are protected in the market. Banks are afraid that there will be a sharp drop in housing prices after they enter into binding contracts with citizens. That would leave the banks with huge losses if they have to get rid of buildings whose owners fail to pay the monthly installments or cannot do so because they lose their jobs, which constitute major guarantees for the banks. It is clear that market certainty and confidence is required for everyone, particularly for many, who for years, have dreamt of owning their own homes. __
