(Bloomberg) -- Turkey wants to regulate crowdfunders who've been pooling together the monthly savings of thousands of Turks to enable them to buy homes at zero interest.
The ruling AK Party is preparing to submit a bill to parliament that will force the companies to seek permission from the banking regulator to operate, according to people with direct knowledge of the matter. The bill will set capital requirements and seek to standardize the industry, the people said, asking not to be identified as the plans aren't yet public.
Read more: Crowdfunding Now Rivals Bank Mortgages in Turkish Housing Sales
The planned regulations come amid a return by Turkey's central bank to more orthodox monetary policies under Governor Naci Agbal, who has hiked interest rates by a cumulative 650 basis points since taking over in November. Higher borrowing costs have increased the appeal of crowdfunding initiatives in Turkey's almost 200 billion-lira ($28 billion) residential-mortgages market.
The government is also planning to introduce a minimum liquidity limit for the crowdfunding firms, the people said. The banking regular and the Treasury and Finance Ministry declined to comment.
People chip into the funding pool and then each get a turn to use the money raised to buy a house, with only a commission charged by the company organizing the funding. This type of borrowing has long been popular with Turkey's Islamic conservatives, as their religious beliefs forbid usury.
The 42 companies operating in the sector have reached about 100,000 home buyers, according to Aydin Ozkan, the deputy chief executive officer of Fuzulev, one of four big players dominating the market.
A 100,000-lira loan from a bank “is repaid as 170,000 liras in 10 years, whereas with this system, the cost falls to 110,000 liras,” Ozkan said.
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