More Low Income Earners to Reap Benefits of NHT Contributions

More Jamaicans will be provided with the opportunity to own their own homes, as the Government moves to ensure greater access to housing solutions by National Housing Trust (NHT) contributors in the lower income groups.
According to Portfolio Minister, Hon. Dr. Horace Chang, some 60 per cent of NHT contributors are unable to access housing, because their income level at the minimum wage and just above is not adequate to afford a mortgage.
Among the categories of earners are security guards, waitresses, bartenders, and small traders. Dr. Chang says that even salaried workers, such as young professionals, who have just graduated from university, are finding it difficult to meet mortgage commitments.
“We have to find a way to deliver to these individuals,” he says in an interview with JIS News.
“Using even a high salary, where a third of your income is devoted to mortgage, they (low income earners) still cannot afford maybe a million, or a million and a half. These are the individuals we have to look at,” he points out.
He says that low income earners should also be given a fair opportunity to own a home as it is their contributions that have aided in providing housing benefits to those with higher incomes.
“In fact, what is happening now is that those people are subsidising the high income groups…because the only people, who can afford the $3 million to $8 million homes are high income workers, and therefore, they are using the money the very low income workers paying, to acquire those properties,” he laments.
The Ministry has embarked on a programme to accelerate the delivery of housing solutions, particularly to lower income earners, over the next three years. The programme, which will be a collaboration between the NHT and the Housing Agency of Jamaica (HAJ), will deliver 8,000 units at a cost of $22 billion.
Dr. Chang says that these new housing solutions have been designed to ensure that persons in the low income categories will reap the benefits of their NHT contributions.
He notes, however, that unlike previous projects for low income earners, “there will be no subsidies built into these solutions”.
“The focus is on serviced lots and starter home units, because once we build the more elaborate structures, we end up in costs that a lot of the workers can’t afford. History has shown us that Jamaicans, once they acquire security of tenure for property, build their own homes at much better quality and much less cost than we can do as a developer,” he points out.
Dr. Chang argues that projects such as the Inner City Housing Programme and Operation Pride, were unsustainable because they were highly subsidised, which meant that the developers had to keep pumping in money to sustain them.
“You had to find new money. The subsidy was too high, so it means that the Housing Trust would have been decapitalised if they continued, because if you’re building at a cost of $5 million and you’re selling for a million, then at some point your money must run out, because you don’t have enough to continue,” he elaborates.
He notes further that attempts to offer the beneficiaries economic opportunities so that they could pay their mortgages were not intense enough.
He says that the Ministry, in collaboration with the HAJ, the NHT, and other critical agencies, are looking at several innovative financial approaches, to assist these individuals to acquire homes.
Among these is the feasibility of allowing NHT contributors to use their refunds, which would have accumulated over a number of years, as a down payment.
“Hence, if a person has been contributing to the NHT for 10 or 15 years and has half a million dollars sitting in refundable contributions, a part of this could become down payment for their house,” he explains.
Another approach is the reintroduction of graduated mortgages. “They (NHT) are examining the possibility of reintroducing graduated mortgages because using Jamaican dollars, the risk with graduated mortgages is not particularly high. There is a natural, almost inflationary rate that is acceptable, and you can structure your mortgage to fit into that, and every five or 10 years, you increase it and in the end, you will still realise your mortgage,” the Housing Minister outlines.
He says the Government has also been in dialogue with private sector entities to examine how some of these persons can be offered economic opportunities, through enterprise loans. “The concept really is to bring lower income earners into the formal economy by affordable mechanisms of taking care of their responsibilities,” he notes.
A total of 5,600 serviced lots and 2,400 houses, are to be delivered under the housing programme, with some $11 billion to be spent in 2009/2010.
The developments being undertaken entail 800 units at Luana, St. Elizabeth; 600 serviced lots and 300 houses at Rhyne Park, St. James; 800 serviced lots at White Hall, Westmoreland; 450 serviced lots and 250 houses at Shooters Hill, St. Catherine; 575 serviced lots at Mount Edgecombe, St. Ann; 300 serviced lots and 150 houses at Green Pond, St. James; and 55 serviced lots and 235 houses at Boscobel, St. Mary.
The NHT will spearhead developments at Longville in Clarendon, to comprise 150 serviced lots and 650 houses; Perth, Manchester, 400 serviced lots and 253 houses; and Hampden, Trelawny, 188 serviced lots and 100 houses.