Many believe that the solution to controlling housing prices is cracking down on "speculation" and "trading" through coercive measures. However, it is worth noting that one of Iran's most radical laws in this regard was passed not in recent years, but during the peak of the 1975 (1354 in the Iranian calendar) oil boom, under the title of the "Land Transactions Law."
Article 1 of this law stipulated:
"The transfer of unbuilt land... is permitted only once, and any subsequent transfer is contingent upon the construction of a building... Any transaction contrary to the provisions of this article is null and void... the transferor [seller] and the notary public shall be sentenced to a correctional imprisonment of three months to two years... The transacted property shall also be transferred free of charge to the ownership of the Ministry of Housing and Urban Development..."
The point that got lost in the hype surrounding the law's passage was its bizarre potential for abuse. The law established penalties for the "seller" and the "notary," but not for the "buyer"!
Imagine buying a property in Iran after this law was passed. After a while, the market downturns. All you had to do was file a criminal complaint citing Article 1. First, the transaction would be voided; second, the seller would go to prison; third, the notary would be dismissed; and fourth, the buyer could get their money back (due to the nullification of the deal) and save themselves from a loss-making purchase!
Reviewing the detailed proceedings of Iran's National Consultative Assembly (the pre-revolution Parliament), we can see the aggressive and dangerous rhetoric representatives used to defend this harsh market intervention.
Dr. Matin (a Member of Parliament), in a session on January 21, 1975, called this law "one of the best legal bills" and "a golden page in the record of Prime Minister Hoveyda's government." With sheer optimism, he stated: "This bill... puts an end forever to the issue of land speculation, stockjobbing, and selling land at unreal prices."
Dr. Reza Oloumi (another MP), in a session on February 16, 1975, defended it with flattery: "In the logic of the Iranian revolution, as stated by the leader of the revolution, the Shahanshah Aryamehr, every kind of freedom is guaranteed in Iran except the freedom to commit treason—(Bravo). ... Anyone who betrays the healthy institutions of Iranian society, attacks Iran's healthy economy... will be punished, and the necessary punishments are foreseen in this bill. This bill is revolutionary, solid, and expressive of Iran's revolutionary social justice. 'Playing with dirt' [land speculation] is now condemned in Iran. Everyone must pursue correct, productive, and useful economic work in industry, agriculture, and services (True!). With a healthy economy and a growth rate of over 40%—the highest in the world today—our healthy economy no longer permits land speculation and abuse. Careful assessments and deep research will show the good economic and social impacts of this strong, logical, and revolutionary government bill."
Ultimately, despite all this praise, the law had no significant impact on the housing sector, either before or after the 1979 Islamic Revolution, and fell into obsolescence.
You might ask: Is this Iranian law still valid today? It has never been explicitly repealed. Although one might argue it was "implicitly repealed" by the passage of post-revolution laws like the Abolition of Ownership of Waste Lands Law (1979) and the Urban Land Law (1987), its lingering presence in Iranian legal codes serves as a historical reminder of an era when people thought "prison" and "confiscation" could override the laws of housing supply and demand.
Written by Reza Bastani Namaghi
Back to Home
