Not enough!
RAJ president says PM’s housing budget a good start, but won’t move the market
PRESIDENT of Realtors Association of Jamaica Newton Johnson has reacted to Prime Minister Andrew Holness’s budget presentation on housing solutions, calling it a “good offer”, but says it lacks the depth to boost Jamaicans’ confidence in homeownership.
“It’s a good offer but it’s really [only] scratching the surface because the demand for housing in Jamaica far exceeds supply now. It’s just not enough to move the market,” Johnson told the Jamaica Observer.
Effective July 1 the Andrew Holness-led Government will roll out new housing goodies, much of which revolve around providing affordable housing solutions for low- and middle-income-earning Jamaicans as well as to regularise informal settlements. The highlight of Holness’s presentation included a commitment to construct 15,009 housing solutions, with more than 96 per cent geared toward lower middle-income to low-income contributors.
In his presentation on Thursday, Holness said the solutions will comprise 4,309 two-bedroom units priced, at an average, below $13 million; 7,600 one-bedroom units priced, at an average, below $10 million; and 3,100 serviced lots priced below $4 million.
The National Housing Trust (NHT) will also develop one-bedroom apartment complexes, particularly within or near urban centres, as starter homes. These apartments will be made available to contributors via sale agreements with an optional buy-back clause that will give mortgagors the option to sell the property back to the NHT after a determined time.
The prime minister reasoned that the model will be an attractive dwelling arrangement for single dwellers and young couples who do not wish to forfeit an NHT first-time homeowners’ benefit in order to secure stable housing.
In responding to concerns around NHT’s beneficiary selection system, the trust will reserve up to 10 per cent of the housing solutions in the current housing plan for under-35-year-old contributors.
Johnson believes that the initiatives may not go far enough to address housing needs.
“I applaud the Government for reviewing the beneficiary selection system to ensure that more young people make up the housing mix. Too many times we’ve seen houses going to ‘Diasporans’ and people over 40 years old,” Johnson said.
“Yes, the Government is working to produce more affordable housing solutions but the big question on everyone’s mind is: ‘Where are those houses going to be located?’ People don’t want to go in far -out place like Clarendon and Linstead, but if it is that that’s where the space is available then the Government must consider having more robust discussions with commercial developers/operators so that a proper ecosystem is built out,” the RAJ president continued.
As for existing homeowners, the Government has responded to calls for the expansion of the 10-plus Home Improvement Loan. All contributors will soon be able to access home improvement loans of up to $3.5 million from the National Housing Trust, 10 years after the initial mortgage loan. Currently, only public sector workers are eligible for 10-plus loans while private sector workers will have to wait 15 years.
Holness has also signed off on a Green Energy Initiative to respond to climate change’s impact on dwellings. The policy will have a direct impact on NHT’s design of new structures, which will be optimised for natural cooling and cross-ventilation, rainwater harvesting, and solar energy.
As of July 1, 2024 NHT contributors will also be able to access a new loan product — the Smart Energy Home Improvement Loan — to outfit their dwellings with any combination of solar panels and batteries, solar water heaters, solar insulation, other renewable energy technology (windmills, hydropower, and biomass), rainwater harvesting, and storage (to include water tanks and pumps).
“The assets must have a useful life that meets or exceeds the loan term. Contributors may access up to $1.5 million (two contributors being able to join and access $1.5 million each) for green energy home improvement at a rate of five per cent,with a payback period of up to 10 years,” the prime minister said in explaining the new loan offering.
In the coming year NHT will also expand its home grants to include the installation of solar panel systems on the houses of public sector pensioners, at a maximum of $1.5 million each. The programme will target 30 of these pensioners per parish each year, for the next three years.
“Overall the benefits are good but while the Government tries to respond to some of the concerns of the average Jamaican, the truth is that most people do not like doing business with the NHT. The process of getting a mortgage is slow and cumbersome, and when they undertake developments there are cost overruns on developments and finishing issues. Those issues need to be addressed too,” Johnson said.
The NHT has been partnering with banks including National Commercial Bank and Scotia Jamaica, as well as large credit union COK Sodality on the revised External Financing Mortgage Programme (EFMP) to replace the long-standing Joint Financing Mortgage Programme. The new programme is expected to create greater “ease of doing business” by pushing higher income band NHT contributors to an expanded list of mortgage institutions through which they can access their full NHT benefits.
The upshot for the trust is that the programme frees up its resources for it to channel more energy into the construction of affordable housing solutions. To date, 10 institutions have signed on to become EFMP partners.