The Auditor General's Office has released a report that states that a monthly rent of MVR 6,600 for Hiyaa flat units is not a feasible option.
The former administration set the rent of the Hiyaa units at MVR 6,600. The current government raised the rent to MVR 11,000, and then lowered it to MVR 7,500 again after the decision was met with harsh criticism from the public. The Housing Development Corporation requested the government to provide details on the calculations that allowed the revision.
After reviewing the numbers, the Auditor General's Office said the initially proposed rent of MVR 11,000, with an additional MVR 1,000 being charged as a maintenance fee for 20 years at an interest rate of 8 percent is an adequate amount to be charged as rent. The calculations were done using the Equated Monthly Installment (EMI) method, taking in to account the loans borrowed for the housing project, interest charged on re-financing loans and loan repayment cash flow, the report noted.
However, the former government did not calculate the monthly rent using the EMI method, and leasing for MVR 6,600 per month would have caused a loss of MVR 1.1 million for each apartment, the report said.
The report further said the value of the Hiyaa project is MVR 8.1 billion, with each unit costing MVR 1.1 million. The report also noted that if the units were leased for MVR 11,000, the government would receive MVR 2.2 billion as net cashflow over 20 years, with no default. However, at the current rate of MVR 8,500 per month, it would cause a deficit of MVR 9.2 billion, it said.
As the former administration set the rent of the Hiyaa units without using the EMI method, the Auditor General's Office recommended using the method in doing calculations for similar projects in the future.
16 towers of 25-storeys each were constructed under the Hiyaa social housing project. The project was contracted to China State Construction Engineering Corporation. Although the government initially decided to lease 7,000 flats, the current administration later revised the number to 6,720, and changed some units into commercial units. Over 200 families have now moved into the flats, and many families are expected to move in by the end of the year.
