More Discussion Needed On Housing for Low Income Earners

Earl Samuels, Assistant General Manager, Jamaica National Building Society (JNBS), makes a point during the recent two-day (Oct 6-7) Regional Housing Conference, organised by the Caribbean Association of Housing Finance Institutions (CASHFI). Mr. Samuels, who is also a former Managing Director, of the NHT, says the discourse on affordable housing continues to exclude low income earners.

Earl Samuels, Assistant General Manager, Jamaica National Building Society (JNBS), makes a point during the recent two-day (Oct 6-7) Regional Housing Conference, organised by the Caribbean Association of Housing Finance Institutions (CASHFI). Mr. Samuels, who is also a former Managing Director, of the NHT, says the discourse on affordable housing continues to exclude low income earners.

Earl Samuels, Assistant General Manager, at the Jamaica National Building Society (JNBS) says there needs to be more discussion on the issue of providing proper housing for low income earners, noting that the debate about affordable housing continues to be one-sided, excluding low income earners from the discourse.

“The majority of the beneficiaries under the National Housing Trust (NHT) are those in the middle-income category and there is a reason for that: Those at the lower income level, they can’t afford it,” Mr. Samuels argued. “Even at $4.5 million at zero percent interest, a significant portion of the contributors would still not be able to afford it,” Mr. Samuels, a former Managing Director of the NHT, emphasised.

The issue recently re-emerged during the recent two-day Regional Housing Conference earlier this month, organised by the Caribbean Association of Housing Finance Institutions (CASHFI), at the Jamaica Pegasus Hotel in Kingston, under the theme, “Transforming Regional Communities through Housing and Economic Development.”

Low-income earners represent about 20 percent to 25 percent of beneficiaries from the NHT, Easton Douglas, Chairman of the NHT says, while middle-income earners make up some 40 percent of beneficiaries, although near equal numbers of middle-income and low-income earners make up the more than 350,000 contributors to the NHT.

His revelation was supported by findings by the Caribbean Policy and Research Institute (CaPRI), which indicated that the NHT has only been able to provide housing for some 12 percent of the population.

“More than 600,000 Jamaicans are not eligible for the loan (mortgages) because the income falls below the minimum wage or they are not contributors,” stated Altricia Dawson, Research Officer at CaPRI, who presented a draft paper at the conference on behalf of Dr. Damien King, Co-Executive Director of CaPRI.

She noted that with more than half a million Jamaicans living below the poverty line, the gap between effective housing demand and need is increasing.

“Some people will never be able to afford housing in this country even if it is a dollar and that is why we are now having an indigent housing programme through the NHT to try and help these persons,” Mr. Douglas stated.

He added that the NHT recently launched the First Step Housing Programme, under which it has developed units at a value of $2.7 million, targeted to low income earners. This model is to be improved in partnership with private developers, he pointed out.

However, Doreen Prendergast, Chief Technical Director in the Ministry of Transport Housing and Works, noted that partnerships with private developers to construct low income housing have not been the best solution, as private companies are about generating profit.  She said the NHT has, in the past, offered special financing to private developers which had low take up.

“Given the situation in the low income market we will need some committed Jamaicans who are willing to see a change in the sector and come forth and decide that yes, it is essential to make a profit, but it is essential to do something for the public good,” she maintained.

She added that partnerships also leave the government vulnerable as the bulk of the risk is borne by central government; noting that moves to strengthen the policy governing private-public partnerships with developers and reduce central government’s risk have only been met by even lower participation by developers.

Mr. Douglas revealed that some private developers were lobbying the NHT to instead increase its benefits, rather than to engage in partnerships with developers to build low income housing projects.

“They are lobbying for us to increase the benefits to $6 million, [for single applicants]; and up to $10 million or $12 million, [for joint applicants]. However, the board is not willing to yield to the lobbying, because the intention of the NHT board, at this time, is to provide for low income contributors,” he emphasised.

However, Mr. Samuels said there are other options. He said Government could look at developing rental housing, giving people the opportunity to own the house over time.

“This is something done in other countries, including Britain and Brazil, where a portion of the rent is treated as an equity investment so that over time the person could eventually become the owner,” he suggested.

He also said Government could also look at implementing a tax incentive for persons who earn below a certain amount to broaden access to home ownership.

“So for persons earning below a certain level, you could look at a programme where you offer them the opportunity to reclaim the taxes on the mortgage offered for the purchase of a low income unit. This could be a good way of also addressing even the squatter issue in Jamaica because what you’re offering is an opportunity for even those who don’t earn a formal income to get access to proper shelter through the formal system,” he suggested. He said the model is not new and has been working even in other Caribbean countries such as Barbados.

But, beyond the issue of low income earners’ inability to draw down benefits from the NHT, Mr. Samuels said bureaucracy continues to be a major factor impacting the price of housing.  He was supported by other participants who pointed to the red tape involved in the approval process for developments and called for the process to be de-centralised and parish councils empowered.

“We need to look at the efficiency of the government bureaucracy in dealing with the approval for development. It is extremely inefficient and those are some of the factors not being considered,” Mr. Samuels stated.

Responding to the issues raised by Mr. Samuels and parish council representatives at the forum, Mr. Douglas said  arrangements are being made that should give Parish Councils more power to better manage the approval process for housing developments. The arrangements are to be announced soon.

The CASHFI housing conference was organised in association with the Inter-American Development Bank and the National Housing Trust (NHT) with CASHFI members, JNBS and The Victoria Mutual Building Society, as main sponsors.