Is the state profiteering from social housing deposits?

The Ministry of Housing offers subsidized apartments through social housing projects, and tens of thousands of applicants vie for limited units. To demonstrate their seriousness, applicants must lodge a deposit, known as the “reservation fee,” at the Housing and Development Bank. The deposit remains frozen for an unspecified period, and if an application is rejected, the amount is refunded.

Still, millions of citizens eagerly submit these deposits. Despite their rising cost, government housing units remain significantly more affordable than their often exorbitant private-sector counterparts.

However, a critical question emerges: Does the state earn from the interest generated on these deposits, which collectively amount to billions of Egyptian pounds?

The answer is: Yes. Officials from the Ministry of Housing, Utilities, and Urban Communities, when asked by Al Manassa, acknowledged that the ministry benefits from the interest on these reservation fees, justifying it as necessary to support the social housing system.

‘We profit, for your benefit’

More than half a million people are competing for 78,000 low-income apartments offered by the ministry between September and December 2024. This intense demand underscores the severe shortage of affordable housing in Egypt, especially amid soaring private-sector prices that can reach tens of millions of pounds.

Applicants' chances of being allocated a unit are slim at around one in seven, they have no influence over the outcome. But for the Housing Ministry, the equation is entirely different. With applications vastly exceeding available units, the ministry gains substantial liquidity from these deposits and accrues sizable interest during the months before the “winners” are selected.

A senior official at the Social Housing and Mortgage Finance Fund told Al Manassa that the fund indeed benefits from the financial returns on these deposits, using the proceeds to help fund social housing projects.

The official, who requested anonymity, explained that applicants typically pay between 20,000 and 30,000 pounds (about $390 to $580). He argued that this sum compensates for the cost of reviewing applications, a process that took around four months for the third and fourth phases of the “Housing for All Egyptians” program.

The official added that part of the interest revenue is used to pay contractors for previously completed units and also helps finance project costs without burdening the national budget.

The lengthy processing period stems from the need to verify applicant eligibility and prioritize submissions. Priority in social housing is given to people with disabilities, female heads of household, married applicants, and, lastly, single individuals. Families with more dependents and lower incomes are also ranked higher.

How much does the ministry earn?

The ministry has not yet announced the final list of accepted applicants in the most recent offering, “Housing for All Egyptians 5”, which opened in September 2024. While some applicants have begun receiving rejection notices, final decisions are expected by June 2025, according to the same official.

This timeline means that some applicants’ deposits may remain locked in the Housing and Development Bank for up to eight months without a definitive acceptance or rejection.

The official declined to disclose the total interest generated from these funds, citing their fluidity. “The amount is variable and constantly withdrawn as applications are rejected. It’s not a fixed or predictable figure,” he said.

He also emphasized that the total interest “isn’t as substantial as some imagine” and that returns are “modest.”

However, when Al Manassa contacted the Housing and Development Bank’s customer service department, they confirmed that deposits exceeding 500,000 pounds ($9,800) earn a minimum annual return of 6.5%.

Applying this rate to the most recent offering, in which approximately 15 billion pounds ($294 million) were deposited, suggests the ministry may be earning nearly 1 billion pounds ($19.6 million) in interest every year.

Why are reservation periods extended?

The ministry has, at times, extended reservation deadlines, including in the most recent offering, which was prolonged twice, closing in mid-January instead of December. This has raised suspicions among applicants interviewed by Al Manassa, who suspect the ministry is deliberately prolonging the process to maximize interest earnings on the deposits.

Officials denied this, however, insisting the extensions are meant to benefit applicants. “We extend the deadline to give people across different segments of society more time to complete their documents and to ensure fairness,” said a source at the financial and administrative affairs department of the New Urban Communities Authority, who is familiar with the housing portfolio.

The source, who also requested anonymity, added, “Many applicants pay the deposit but fail to submit all required documents. If we closed the application window too soon, they’d miss the chance to complete their applications.”

The social-housing fund official with a role overseeing the reservation process clarified that the extended period for the most recent offering was largely due to a “two-year halt in new low-income housing between late 2022 and September 2024 despite consistently high demand.”

The extension, he said, also provides more time to accommodate inquiries from people with disabilities. Rejection rates in social housing are high, often around 25%, necessitating the collection of more applications to reach the right beneficiaries.

In the latest offering, the rejection rate reached 50%—significantly higher than in previous rounds.

Applicants: ‘We are losing’

It’s not just the rejected applicants who are frustrated. Successful ones also face long waits, at times years, for their units while continuing to make installment payments that yield no immediate benefit.

Hanaa Abdel Razek, who applied for a unit in the 14th offering in the Hadayek October City, told Al Manassa she has been waiting for five years, despite being promised delivery within three. “In that time, the state launched three new offerings for low-income housing. Wouldn’t it have made more sense to finish delivering our homes before launching more campaigns to collect more citizens’ money?” she said.

“The state used our money to build new housing. We’re left behind. If I’d invested the deposit in gold instead, I would have profited,” she added, noting that the price of gold surged from less than 800 pounds to around 5,000 pounds per gram during the same period.

Mohamed Abu El-Naga, also a participant in the 14th offering, but in Capital Gardens City, agreed. “The state is making the problem worse by offering too few units. Why not increase the number of available apartments in each round?” he asked.

Should we assume good intentions?

The official from the New Urban Communities Authority defended the ministry’s intentions, arguing that the agency is working to shorten the time it holds citizens’ money. “In the most recent offering, we began refunding deposits to unsuccessful applicants less than two weeks after the lottery, compared to up to three months in earlier campaigns.”

According to the official, many citizens voluntarily leave their deposits in ministry accounts, hoping they’ll be carried over into future offerings.

“We send text messages to those who weren’t selected, urging them to withdraw their deposits and warning that any delay is their own responsibility. Still, some have left their money with the fund since 2018,” he said.

Leaving the deposit with the ministry once granted applicants priority in future offerings, but that policy was scrapped after it led to lengthy waiting lists.

Urban researcher Yehia Shawkat told Al Manassa that the underlying issue is the government’s insistence on solving the housing crisis solely through construction and homeownership. He called for broader strategies, including cash subsidies for renters.

“I welcome any government effort to help people secure appropriate housing,” Shawkat said. “But it’s time to rethink house building as the only solution to the housing crisis.”

He warned that the legislative reforms currently being discussed to liberalize old rent contracts could further exacerbate housing insecurity. “There are 1.6 million households living under old rental agreements. They’ll soon face significant rent hikes. The government should allocate a portion of the social housing budget to subsidize rent increases for families that can’t afford them.”